Winnipeg Free Press - PRINT EDITION

A tax-and-cut solution

Struthers hikes levy on smokes and gas, shrinks government agencies to battle a $1-B deficit

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Finance Minister Stan Struthers is looking to Sunday shopping for fiscal salvation.

He wants to cut costs by merging two sacred cash cows -- Manitoba Lotteries and the Manitoba Liquor Control Commission -- into one mega-Crown corporation.

Struthers' war on a record $1-billion deficit will also be fought through higher taxes on everything from cigarettes to gas to tattoos.

Welcome to the first budget of Premier Greg Selinger's new NDP government, an economic blueprint that relies not only on your usual grab bag of cuts and tax hikes, but also some new fiscal levers that emerge out of left field.

"Don't underestimate our desire to balance the budget in 2014," the rookie finance minister said Tuesday.

To that end, Struthers will also shrink the number of regional health authorities to five from 11, a move expected to save $10 million.

What it is all supposed to add up to is a projected deficit of $460 million for 2012-2013, a figure less than half the flood-induced $1.12-billion shortfall of last year. But for those keeping track, that $460-million projection misses the forecast shortfall of $345 million the NDP listed in 2011's pre-election budget.

When it comes to belt-tightening, Struthers argues he has trimmed government spending by 3.9 per cent.

"There are some who think we should have cut way deeper," Struthers said. "I think it's not so much did we do enough, but did we get the balance right? I think we have."

To help show politicians are prepared to share the pain of cuts, the NDP will continue a 20 per cent rollback of cabinet ministers' salaries.

But critics counter that government spending is actually rising more than three per cent. And both sides can claim to be right.

The government arrived at its figure by comparing its budget to flood-bloated spending in 2011, while its critics compared what the province planned to spend this year and what it planned to spend a year ago before the flood.

According to Marilyn Braun-Pollon of the Canadian Federation of Independent Business, spending will go up 3.1 per cent.

"That's not sustainable," she said, noting Manitoba's inflation rate is expected to be 1.9 per cent 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.

Though the tax on cigarettes will rise 2.5 cents per smoke and the gas tax jumps 2.5 cents per litre, there was one tax break for everyone: The value of the basic personal income tax exemption increases by $250 this year.

The merger of the two Crown corporations caught many off guard.

"We're all a bit surprised by this merger. No one really saw this coming," Manitoba Federation of Labour president Kevin Rebeck said. "I'm curious to see what we face."

The government also announced it's prepared to loosen Sunday shopping laws, the most restrictive in the country. Most major stores can only open between noon and 6 p.m. on Sundays. Struthers said he expects extending Sunday shopping hours can help boost the economy and government coffers -- he couldn't spell out by how much -- and allow retailers to better compete against online and cross-border shopping.

He said the province's budget woes won't hinder the NDP in fulfilling its election promises to provide a doctor for every Manitoban by 2015 and make efforts to clean up Lake Winnipeg.

The latter includes an initiative, to be introduced this summer, to use "green infrastructure" to better manage storm water and reduce sewage overflows.

The government surprised both business and labour by announcing it would raise the minimum wage by 25 cents to $10.25 on Oct. 1. Both groups said they hadn't been consulted.

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


Republished from the Winnipeg Free Press print edition April 18, 2012 B1

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