Winnipeg Free Press - PRINT EDITION

Opposition labels HST a tax grab

NDP plans worry Tories, Liberals

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Manitoba's opposition parties worry the Doer government could use a controversial plan to harmonize the province's sales tax with the federal GST as a way to feather its financial pillow.

Tory Leader Hugh McFadyen and Liberal Leader Jon Gerrard said the potential windfall from a harmonized sales tax could help the NDP balance next year's budget -- a budget expected to see less revenue because of the economic slowdown.

"The big concern is the government is desperate for revenue and they would use it as a cash grab," McFadyen said.

The other concern is the Doer government appears to be seriously thinking about an HST after saying it was a non-starter for so long.

"Premier Gary Doer seems to be holding his cards close to his vest," Gerrard said, adding the fact Finance Minister Greg Selinger is publicly discussing the idea suggests the NDP is strongly considering harmonization.

The province also has a decade's worth of analysis behind it to justify whether or not an HST would be a benefit to the province -- analysis the province is not yet sharing.

"Manitobans deserve to be treated fairly by this government," Gerrard said. "We need some honesty in what they're planning to do."

How much of a windfall an HST would bring to the province is unclear.

Federal Finance Minister Jim Flaherty has dangled huge pots of cash in front of Ontario and British Columbia to help convince them to harmonize the two taxes. Ontario is getting $4.3 billion and B.C. $1.6 billion from Ottawa. How much Manitoba would get is unknown.

With one tax, administered by Ottawa, provinces also save money by not having to collect a provincial sales tax.

The upside of an HST flows to busines as they'll have less paperwork and be less burdened by red tape. They also will begin to receive a PST rebate for input costs and capital investments that they currently get only for the GST.

The downside is what it means to individual consumers. Critics say they will end up paying sales tax -- as high as 12 per cent -- on more items than they do now because the province has far more items exempt from PST than the federal government does for the GST. Among items currently exempt from PST in Manitoba are natural gas, new home construction, home renovations, gasoline and fitness memberships.

McFadyen said his Progressive Conservations will oppose any plan that will see consumers pay more in taxes than they do now.

"Manitoban's are paying enough already," he said. Gerrard said if implemented, an HST should be lowered to about 10 per cent to compensate for more goods and services being taxed.

HST talks in Ontario and B.C. saw a backlash this week with even Conservative MPs speaking out against it.

At least three Conservative MPs -- one from Ontario and two from B.C. -- denied their government had anything to do with those two provinces harmonizing their sales taxes with the GST. They said the decision on harmonization was made by the provincial governments alone. Nova Scotia, New Brunswick and Newfoundland and Labrador harmonized their sales taxes with the federal GST more than 10 years ago. Quebec partially harmonized its sales tax system and Alberta has no provincial sales tax. Saskatchewan and Prince Edward Island are the other holdouts.

bruce.owen@freepress.mb.ca mia.rabson@freepress.mb.ca

Republished from the Winnipeg Free Press print edition August 22, 2009 A5

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