Cigarette, gas taxes up in Manitoba budget

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Finance Minister Stan Struthers speaks with reporters about the 2012 Manitoba Budget in the lockup before his budget speech at the Manitoba Legislature Tuesday. (JOE BRYKSA / WINNIPEG FREE PRESS) Photo Store

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Leader of the opposition, Hugh McFadyen, talks to the media after the NDP government tables its 2012 budget on Tuesday. (MIKE DEAL / WINNIPEG FREE PRESS) Photo Store

Manitobans will pay higher cigarette and fuel taxes and see the provincial sales tax applied to several new services in a budget that reduces overall spending — or increases it, depending on your point of view.

Smokers will pay two-and-a-half cents more per cigarette effective at midnight tonight while drivers will pay an extra 2.5 cents per litre to fill their vehicles’ fuel tanks as of May 1.

Meanwhile, the government will apply the PST to services such as manicures, pedicures, facials and haircuts that cost more than $50.

Finance Minister Stan Struthers also announced the province would "modernize" Sunday shopping laws, although he provided few details. Currently, most major stores can only open their doors between noon and 6 p.m. on Sundays. Businesses have long called for the ability to set their own Sunday hours.

Struthers announced several measures for decreasing government administrative costs. As reported by the Free Press, the government will reduce the number of regional health authorities in Manitoba to five from 11. It will also merge the Manitoba Liquor Control Commission with the Manitoba Lotteries Corp. And it will also slash the number of government-appointed agencies and boards.

The government also plans to rein in spending by freezing or reducing spending in 10 departments and agencies.

Despite those measures, Struthers still projects a $460-million deficit for the current fiscal year. It’s a far cry from the flood-induced $1.12 billion shortfall for 2011-2012, but still short of where the government hoped to be in its bid to slay the deficit by 2014.

The government claimed to be reducing overall spending by 3.9 per cent. But that isn’t nearly as miserly as it seems because the province had to spend hundreds of millions of dollars in flood compensation this past year that won’t be repeated in the coming year.

The province’s spending is increasing 3.1 per cent compared with last year’s budgeted amounts, said Marilyn Braun-Pollon, a spokeswoman for the Canadian Federation of Independent Business.

"That’s not sustainable," she said, noting inflation is expected to be 1.9 per cent in Manitoba in the coming year.

"Small business owners will really view this budget as moving Manitoba backwards," she said noting the province will collect more than $180 million in new taxes.

Conservative Leader Hugh McFadyen also criticized the tax hikes, which include adding PST to several new insurance services.

"This is a government that has an out-of-control spending problem and Manitoba families are now being asked to pay for that," he said.

Struthers reiterated the government’s intention to balance the budget by 2014. "Don’t underestimate our desire to balance the budget in 2014," he told reporters.

MLAs will see their wages frozen and cabinet ministers will continue to have their salaries reduced by 20 per cent in the coming year, Struthers said.

Health Department spending is budgeted to exceed $5 billion for the first time in Manitoba. The government promised to provide faster cancer testing and treatment and renewed a commitment to provide free cancer drugs for all patients, allowing more patients to remain home during treatment. It also vowed to train and hire more doctors, nurses, physician assistants, nurse practitioners and health technologists.

Manitoba will also reduce income taxes by increasing the basic personal exemption by $250 this year. The province also surprised business and labour leaders by announcing that the minimum wage will rise by 25 cents an hour Oct. 1 to $10.25.

Struthers said that revenues raised from increased gas taxes and a $35 increase in vehicle registration fees will be spent on roads and other infrastructure.

However, the head of the Association of Manitoba Municipalities said he's "not very impressed" with the fact none of the new gas tax money will flow to rural municipalities. "Really, they’ve done nothing to stop the problem in rural Manitoba," he said.

Ron Thiessen, executive director of the Manitoba chapter of the Canadian Parks and Wilderness Society, said he's disappointed in a decrease in funding toward new environmental protection measures.

"If the province is going to live up to its commitments to protect Lake Winnipeg and protect peat lands that act as sponges and water filters to save Lake Winnipeg, adequate resources are going to be required," he said.

Colin Craig, Prairie director of the Canadian Taxpayers Federation, said the NDP failed to get spending under control despite several plans to save money, such as amalgamating regional health authorities and putting Manitoba Lotteries and the Manitoba Liquor Control Commission under one roof and a fury of new fees.

"The government’s debt is increasing by about $47 per second this year," Craig said. "They needed to get spending fundamentally under control and that didn’t happen in this budget."

larry.kusch@freepress.b.ca

— with files from Bruce Owen