The Selinger government ignored the advice of its own finance department staff when it raised the provincial sales tax July 1, the Canadian Taxpayers Federation said today.
CTF Prairie Director Colin Craig said the documents he obtained through a freedom of information request suggest the government didn’t follow proper legal and legislative procedures before raising the sales tax by one point to eight per cent.
Craig said that in a Feb. 4, 2013 briefing note on raising the PST, the Manitoba government’s director of taxation advised the province must either hold a referendum or pass legislation to make it legal.
"I think it’s pretty clear from the documents that senior staff felt that legislation had to be passed first," Craig said. "You’ve got the director of taxation who’s been there years and years. This wasn’t some intern putting this document together on the back of a napkin."
The document was prepared by Kristine Seier, assistant director at Manitoba Finance and Richard Goern, a director at the province's taxation analysis branch.
Specifically, finance staff advised Feb. 4, 2013:
"An increased sales tax rate would require either a referendum under The Balanced Budget Act or a notwithstanding clause overriding the referendum requirement, which would require committee hearings into the amendment. The referendum must be held, or the notwithstanding clause enacted, before a rate increase could take effect. A notwithstanding clause enacted during the normal legislative agenda could receive royal assent as early as June of 2013 as part of the Budget Implementation and Tax Statutes Amendment Act (BITSA), which means the rate increase could take effect July 1…"
Craig also said unnecessarily blacked-out information in the document suggests government may have considered increasing PST higher than eight per cent.
Bill 20, the legislation that waives the referendum requirement and raises the PST, has still not yet passed. The bill is to come up for a vote in the legislative assembly after the house reconvenes in November.
The Opposition Progressive Conservatives have said they are challenging the tax increase in court once Bill 20 is passed.
Progressive Conservative Opposition Finance Critic Myrna Driedger said the documents show the Selinger government ignored the advice of two of its experts.
She said the Tories asked for the same information in its own FOI request, but was denied.
"There’s like a big bubble of secrecy around what they’re doing these days and we have huge concerns about the lack of transparency," Driedger said.
Craig also said the CTF is calling on the government to immediately reverse the sales tax increase, refund the money and cut its "wasteful spending" instead.
To read the briefing note, click here.
To see blacked-out sections on the PST increase, click here.
To read other finance material on the PST increase, click here