Winnipeg Free Press - PRINT EDITION

PST hike blamed for sales drop

Manitoba retailers took biggest hit in Canada in July

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Manitoba retailers suffered the biggest drop in sales -- by far -- in Canada in July, the same month the province's one-point increase in the PST kicked in.

Statistics Canada reported Tuesday retail sales fell 4.1 per cent compared with a month earlier, while sales across the country as a whole edged up 0.6 per cent. The numbers were adjusted for seasonal variations.

Manitoba was one of five provinces and territories to record a setback. The next worst performance was in Saskatchewan, where sales declined by 1.9 per cent between June and July.

On a year-over-year basis, Manitoba sales improved slightly -- 0.8 per cent -- compared with the previous July. Across Canada, July sales were up three per cent compared with the same month a year earlier.

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Lanny McInnes, a spokesman for the Retail Council of Canada, said he was not surprised by the Manitoba drop. The weather was unseasonably cool and rainy in July, and consumer prices had been rising here more than in other parts of the country.

But McInnes said the main factor behind the July drop was the Selinger government's decision to hike the retail sales tax to eight per cent.

"We had heard from our members that July sales were being impacted and we've seen the proof today in the stats." McInnes said Tuesday.

Another factor contributing to the month-to-month drop is some Manitoba consumers likely stocked up in June before the sales tax hike took effect, he said.

Conservative Leader Brian Pallister said he was not shocked Manitoba sales were down. His party's researchers said the provincial retail sales drop was the largest single-month plunge in more than two decades.

"If Manitobans don't have as much money to spend, then obviously retail sales numbers are going to drop," he said.

Pallister estimated the government has taken in an extra $65 million in revenue since the PST was boosted to eight per cent from seven per cent July 1. "That is money that the NDP has sucked out of the economy to use indiscriminately on a spending spree," he said.

Manitoba Infrastructure and Transportation Minister Steve Ashton said critics shouldn't make assumptions about Manitoba's economic status by "cherry picking" statistics.

Generally, Ashton said, the economy and population are growing, building permits are up and the housing market is booming.

"Just ask Manitobans, ask them what their homes are worth today compared with the 1990s," he said.

Ashton said the government plans to announce some "very significant infrastructure investments" in the next "number of months" that will spur economic growth. "The best way to keep (Manitoba) growing is to keep investing in infrastructure," he said.

larry.kusch@freepress.mb.ca

Republished from the Winnipeg Free Press print edition September 25, 2013 B4

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