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Province ignored advisers on tax hike, group charges

Needed referendum or legislation change

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The Selinger government ignored the advice of its own taxation experts when it raised the provincial sales tax July 1, the Canadian Taxpayers Federation says.

CTF Prairie director Colin Craig said the documents, 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."

Finance Minister Stan Struthers said the document Craig released pertains more to a discussion within government over the proposed tax hike, nothing more.

"We get a range of options from Finance officials," he said. "We get options from other departments. We get options from our legal experts who we pay very close attention to in terms of moving forward with an item like this.

"Our legal experts have assured us we have the authority to move forward on this."

The document was prepared by Kristine Seier, assistant director at Manitoba Finance and Richard Goern, a director at the province's taxation analysis branch. The documents are found at

Specifically, they advised on 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 the government may have considered increasing the PST higher than eight per cent.

Bill 20, the legislation that waives the referendum requirement and raises the PST, has not yet passed. The bill is to come up for a vote in the legislative assembly after the house reconvenes Nov. 12.

The Opposition Progressive Conservatives have said they will challenge the tax increase in court once Bill 20 is passed.

Progressive Conservative finance critic Myrna Driedger said the documents also show how secretive the government is because large portions are blacked out.

She also 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.

Republished from the Winnipeg Free Press print edition October 10, 2013 A5

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