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A Taxing Problem: Jackman-Atkinson

March 14, 2020 8:04 AM | Columns

By Kate Jackman-Atkinson, Editor, myWestman.ca

Manitoba Legislative Building

The Golden Boy stands on top of the dome of the Manitoba Legislature in Winnipeg. (THE CANADIAN PRESS / John Woods)

Last week, the provincial government announced a new tax, a $25 per tonne Green Levy. They also announced some tax relief in the form of a one percent reduction in the PST. Both changes will come into effect July 1 and I’ll be honest, the whole proposal has me confused.

On the surface, this looks like the same proposal the province came up with in late 2017, when they announced the Made In Manitoba Climate Plan. The federal government axed this plan, which was a flat levy of $25 per tonne, saying it was not enough. The federal backstop program, which ended up being applied to Manitoba residents, started with a $10 per tonne levy in 2018, rising by $10 per tonne each year, until reaching $50 per tonne in 2022.

Last week’s announcement gave no indication that the federal government had changed its mind and would now accept this level of taxation. In the announcement, Manitoba Premier Brian Pallister seemed to be spinning this as a way for the federal Liberals to curry favour with the Prairies, saying, “Manitoba has offered to be a bridge between east and west on climate and carbon and that offer still stands.”

I’m still confused: why this plan, why now?

By the response following the announcement, while many groups had concerns with the federal carbon tax, a Made in Manitoba plan wasn’t necessarily what they were looking for in a solution. The general farm group Keystone Agricultural Producers (KAP) has spent much of the last year lobbying for a carbon tax exemption for fuels used in agricultural operations, in particular, barn heating and grain drying. In an official response to the announcement, KAP expressed support for a plan that would offer this exemption, but it was measured.

The Canadian Federation of Independent Business (CFIB) was supportive of the PST reduction. The Canadian Taxpayers Federation criticized the provincial government for its about-face on a carbon tax. Pallister had originally said he would fight Ottawa on the tax, but last week’s announcement came as the anti-carbon tax movement was gaining strength, following an Alberta Court of Appeals decision that the federal plan was unconstitutional.

Perhaps there are backroom discussions and Ottawa is willing to revisit its decision, but there seems to be no indication that’s the case. Instead, what seems likely to happen is that the federal backstop will top up the Manitoba levy. This means that in 2020, Manitobans will likely pay $25 per tonne to the provincial government and another $5 per tonne to the federal government, to make up the $30 per tonne total the feds have targeted for 2020. It’s no wonder KAP noted concerns over an unclear tax structure.

While the provincial levy is expected to raise about $285 million, the PST reduction is expected to cost the province $325 million. Not only will the tax cut result in a net decrease in government income, but it’s also not clear it will help those who most need it. The federal government has paired their carbon tax with targeted rebates to lower-income Canadians and those who live in rural and remote areas.

A PST reduction will have no such effect. Because it is a consumption-based tax, those who spend more money will see a greater reduction in their tax bills. This means that lower-income Manitobans, who spend less money because they have less to spend, won’t see much for savings. It’s hard to imagine that the federal government will continue to provide additional tax breaks to rural Manitobans when they aren’t funding the program.

As the provincial government uses the need to rein in spending as justification for cuts to services, adding another government department to administer the levy, as well as funding a new tax cut, creates more questions than answers.


Tags: Manitoba