Saturday, 4 May 2013

PST Hike

PST hike of 1 percentage point
will hit Manitobans, particularly
low income consumers, where it hurts:
the wallet.

Image Source: Winnipeg Free Press/
BORIS MINKEVICH
Correction May 5, 2013: Steve Lambert notes that I misuse "debt" when I mean "deficit". Noted & corrected.

The Provincial Sales Tax goes up from 7% of pretax purchase value to 8% of pretax purchase value in the 2013 Manitoba Budget. Here are some more facts:

Selinger burns through
political capital with regressive
user-fee and sales tax hikes.

Image Source: Ministerial Conference
of the Canadian
Francophonie
.
The Ledge might have the right to arbitrarily chuck out laws guaranteeing citizen input at their whim (as, it seems, the Federal parliament does), but they shouldn't. It runs contrary to the populist political culture of our province where we expect respect, humility, and collaboration from our elected representatives. Selinger rightly opposed Harper's circumvention of farmer-input Wheat Board legislation. For the shake of integrity and the principle of participatory democracy he should hold a referendum.

The people of Manitoba are pissed off. The Canadian Federation of Taxpayers Prairie director Colin Craig, the Manitoba Chamber of Commerce, and provincial Conservative leader Brian Pallister are all leading calls for a referendum on the issue. And they're right - for the shake of citizen participation, there has to be a referendum on this hike. Given the pre-election promises of "no tax hikes", it's doubly important that the Premier gets our consent before charging ahead.  

This tax hike and the way it was brought will dramatically influence Manitoba politics moving forward. The populist right is already acquiring lots of political capital over this issue, with Brodbeck advising readers on the tax protest and the previously mentioned trio of Craig, MB Chamber of Commerce, and Pallister rallying opposition. Hundreds of Manitobans showed up to the May 2 PST hike protest at the Ledge.



While there's certainly some diehard reactionaries in that crowd (anyone who compares the Manitoba NDP to  Soviet communists is only a few parallels north of Tea Party nuttiness), mainstream Manitoba is also ticked. Given that the NDP was sliding before the budget release, this can only spell bad news for the Dippers and good news for the Pallister CONs. It'll be hard for even Goertzen to screw this up.

With the fiscal situation in mind, what would I have done? Part of me thinks it would be tolerable to just wait to get out've annual deficits - both the "deficit-free by 2014" and "no PST hike" promises were reckless  given future economic uncertainty. Nobody wins promising tax hikes (as Judy found out), but promising both for your entire term was foolhardy. As the economy booms and global demand upticks, Manitoba's revenues will naturally increase - reducing the debt annual deficit. Obviously, though, I would have to review the provincial finances more closely to see which parts of the debt annual deficit are cyclical and which are structural.

When it comes to quick, revenue-side fixes through consumption taxes I have a few ideas:
An inheritance tax on $300,000 + estates is a
progressive means of collecting more taxes.

Image Source: Welcome to the Wellington
Mansion


  • Listen to provincial Liberal leader Jon Gerrard: give the poor a PST rebate. Nay, give the bottom 60% of income earners PST rebates (smaller percentages as income increases, that is, to make the rebate scheme progressive).
  • Established a $100/tonne carbon tax to deal with Manitoba's subpar environmental record. Likewise, a rebate scheme for the bottom 60% could make this tax progressive. 
Another progressive revenue policy that could work would be inheritance taxes on estates exceeding $300,000. US data seems indicates that inheritance taxes have a mild to nonexistent effect on the savings and work effort of present day earners and will likely incentivize heirs to work more.

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9 comments:

  1. How about they just cut the bureacracy instead of rasing taxes ? That too difficult ?

    And yes, it is about the Right to Vote. Which begs the question , why aren't Conservatives and Liberals pushing that. Seems all they want to do is run an election campaign 2 years ahead of schedule.

    As a FreeP poster meh'd - we were paying 7% PST and 7% GST not to long ago and we survived. He's got a point. That's why the Right to Vote should be the only issue on the table.

    ReplyDelete
    Replies
    1. What specific "administrative fat" do you propose cutting?

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    2. Also, the carbon tax itself is something that needs to happen for other reasons. Whether it's revenue positive or the result of a neutral tax shift, any new budget should apply it.

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  2. Middle management. Consulting services. School Boards, Whra administration off the top of my head.

    Bringing the provincial public service to New Brunswick levels, which are still higher than the national average, as a percentage will save upwards of 600 Million.

    ReplyDelete
    Replies
    1. Manitoba and Saskatchewan are unique cases when it comes to public sector employment. Getting New Brunswick levels of public sector employment as a share of the workforce is somewhat unreasonable given New Brunswick's lack of many crown corporations like MPI (all auto-insurance agents are in private sector there).

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  3. The administrative cut that I think is the most logical seems reducing cabinet positions. Under Selinger, it has risen to 19. That is a lot mouths to feed. It should be 15 like it was with Doer.

    I think Manitoba Housing has too many offices. There are 25 in the province, close to 30 if you include youth offices.

    I would sell 1571 Dublin provincial yard and maybe combine with the Dominion Bridge development which might be huge. Use the sale price to pay for a new yard in Centreport.

    I think it is time to consider making Highway 75 a toll road and ensuring it is paid for by the users rather than being a $100 million drain for each section re-built. Shouldn't it be paid for by those headed to Grand Forks airport among others?

    Stop the partisan ad campaigns for the budget and Hydro.

    I could go on...

    ReplyDelete
  4. Wow!

    I don't often agree with much you say, but....

    If you are running a deficit, then giving seniors that OWN their own homes a school tax break while implementing a PST hike is reckless and frankly, stupid.

    Also, roll back the $7.5M software upgrade at energy, mines and innovation. Cancel the additional $600K MLAs get for constituency offices.

    This government has bloated the bureaucracy something fierce. I always laugh when they point fingers at the opposition ans suggest they would cut front line services. I laugh because the NDP would never cut the bureaucracy, THEY'd cut front line services.

    A PST hike would be more palatable if it went to paying for front line services. Instead, it fills the trough for the MLAs and bureaucracy.

    ReplyDelete
  5. Implement 2% small business tax. We're the only province that doesn't have one. The NDP likes to portray small businesses as cupcake shops and boutiques, but most are accountants, consultants, landlords, etc... There is no reason not to tax them.

    Also ... Put Bipole III on ice :-)

    ReplyDelete
    Replies
    1. Yeah, perserving "small business" can be used to justify a whole swath of poor policies. In the US, it's often based on the fact that "small businesses create the most jobs" while ignoring that they also lose the most jobs. The Federal Dippers seem to be following suite with preferential tax treatment policies, but a small business tax increase is probably due in Manitoba.

      Delete