Provincial budget includes new carbon tax and cuts sales tax, projects a $220-million deficit

The Manitoba budget introduced by the governing Progressive Conservatives March 19 includes a $25 per tonne carbon tax that won’t increase as well as a one percentage point reduction in the provincial sales tax (PST), both of which come into effect July 1.

The financial blueprint for the 2020-21 fiscal year also includes more money for the provincial rainy day fund and the emergency expenditures contingency while projecting a $220 million deficit, though the overall economic impact of the COVID-19 pandemic makes projecting economic performance more difficult than usual this spring.

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Other tax and fee reductions in the budget include increasing the threshold for the payroll tax, which is estimated to save money for 1,000 employers and the elimination of probate fees July 1.

The reduction of the PST from seven per cent to six is expected to save an average Manitoba household $345 per year, Finance Minister Scott Fielding says.

“Manitoba will be the only province that has cut its sales tax in recent years and we’ve done it twice,” said Fielding.

The total health care budget is $6.8 billion and includes an additional $10 million over the previous year for cataract and joint replacement surgeries as well as a $2 million increase in mental health and addictions treatment. Funding for implementation of the provincial clinical and preventative services plan, intended to provide patients with more health care close to home and reduce the need for medical trips to Winnipeg, is also included. Investments of more than $250 million are planned for the next four years.

School districts are getting $1.3 billion in operating grants for the 2020-21 budget year, and the province is investing $2 million towards adding 1,000 licensed early learning and child care spaces. The Manitoba Scholarship and Bursary Program is also getting a $4.8 million increase, including $1.8 million for the Manitoba Bursary Program and $3 million for the Manitoba Scholarship and Bursary Initiative. The province says it will also make $41 million worth of interest-free loans available for post secondary students. 

Six million dollars is also being dedicated towards 27 additional police officers, while $5 million is going to fight crime and gang activity and $1 million towards deterring impaired driving.

The highways capital budget is going up $12.5 million to $362.5 million.

A $500,000 investment towards implementation of the First Nations Mineral Development Protocol will see up to $50,000 each directed to First Nations to support mineral exploration and development within their territories.

Manitoba Liberal leader Dougald Lamont said in press release that the budget was likely based on flawed assumptions, saying 1.3 per cent GDP growth and low unemployment are no longer likely and that increased revenue of more than $700 million from income taxes and Manitoba Liquor & Lotteries is wishful thinking as there could be a pandemic-related recession.

“The PCs are managing to cut, freeze, and run up debt all at the same time,” said Lamont. “It is a trifecta of fiscal incompetence at a time of crisis. If the PCs were serious about their concerns with Manitoba’s finances, they would not be offering yet another PST reduction at a time of a global pandemic, while still trying to balance the budget.”

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