Tuesday, April 23, 2013

The 8% Tax Increase - Manitoba Provincial Budget

The provincial finances are awful. The NDP government blames the flooding and the economy for their predicament. They are not inaccurate for saying these are two important aspects of why this province is having problems.

The Doer and Selinger governments through four majorities have blamed the provincial Progressive Conservatives for their sorry state. And most recently, they have blamed Brian Pallister for why things are the way they are. It is a narrative that has worked for them and might again if they keep hammering at it.

Or maybe not. At some point a party outstays its welcome. Taxes go up, services go down and still the end of the tunnel is not in sight. The governing party resorts to fear and anger and it ends up getting them kicked out.

That old axiom that governments are not voted in, they are voted out is often true.

 The NDP government is behind the 8 ball with their 8% sales tax.

There were probably a few alternatives out there for them to avoid the tax and they didn't take them. It is hard to imagine that Gary Doer would have chosen to raise the tax. It is unlikely that he would have so dramatically gone against calling a referendum.

The NDP pledged in the 2011 election not to raise tax. They also pledged to live by the rule that a referendum be called if the government ever did raise tax. They have sidestepped and created loopholes in the legislation this far but raising the provincial sales tax was going to obviously create legal problems.

Premier Greg Selinger decided the best way to proceed with Finance Minister Stan Struther's budget was to negate the rule on calling a referendum. Legislation to gut the balanced budget rules have been introduced.

The reason the NDP gives is that there is not not enough time and it is too costly to call a referendum.

The plain truth is that Greg Selinger knows there is fear on the part of the government that their budget will be defeated by the public. They would rather ram through the budget in the Legislature and then lay low for months when the session ends and hope the public cools down. The majority they have in the assembly pretty much guarantees their budget passes unless...

The big question is whether sidestepping the law is legal. Timing is everything. If the government had attempted to remove the referendum prior to the budget, the law would clearly favour them. However, it raises questions that the budget can be passed ahead of negating the law at the same time. It remains to be seen whether this goes to court.

The $278 million brought in from the 1% hike is designated for infrastructure. However, don't expect much of it to pave your municipal streets. The money is for provincial infrastructure with only special projects getting anything within cities and towns.

There is a lot of debate about what to do with the money and certainly, it could do a lot for provincial roads, bridges and the like. However, the list of demands is so great and the restrictions on institutions, school divisions and municipalities even greater.

The tuition freeze and restrictions on local governments and boards from raising their own taxes aside from property has created a deficit in infrastructure and programming.

The spending the government does do puts it $500 million in the hole every year.

In the last election many governments in Canada were re-elected based on patience and uncertainty that a change was the right way to go. Now we see a number of governments facing defeat. The patience has disappeared.

The Official Opposition through Brian Pallister's Progressive Conservatives has found an opening to attack Greg Selinger and the NDP on this budget. The miscues on how much the budget would cost and how much would be directed to infrastructure have left the feeling the government is directionless. The reasons given for no referendum sound like cowardice. The speed of which the legislation is pushed through feels like arrogance and contempt.

The alternatives to the budget are being offered right now rather than just straight out criticism. This is a moment where the government looks to have faltered. The tax changes they did make seniors and the programs they announced for nurses feel like distractions to the bigger story here: The government doesn't know what to do about the future except hope.

There may be a sea change going on in Manitoba.

If the Progressive Conservatives can hold off on forming a circular firing squad and keep offering alternatives to NDP policies, it might show just how empty the Greg Selinger pantry is of ideas.


Anonymous said...

"If the government had attempted to remove the referendum prior to the budget, the law would clearly favour them "

This is exactly what they had to do. its called process. Abolish the inconvenient law then table the PST hike.

Tabling the PST hike along with abolishing the referendum law is illogical as per the existing statute which is quite clear as to what is required before you can introduce a tax hike.

I suspect somehow , in Manitoba, it makes perfect sense.

unclebob said...

If the NDP members were lawyers or accountants or securities salespeople they would have been unceremoniously dumped from their profession. Even as private citizens perpetrating fraud by committing to one thing and doing another they would be open to both civil and likely criminal charges.

More importantly the most critical element of the sales tax increase is the complete loss of credibility of elected officials. This damages the NDP and its members but the damage goes well beyond them to the system as a whole. We continue down the slippery slope of more and more people losing faith in our democratic system.

From a crass political perspective, I believe Selinger might also be viewing the PCs to be as you so well put it "a circle firing squad" and betting that they will stay true to form.

I am thinking this pattern of craziness makes very fertile ground for new players.