The Winnipeg Chamber of Commerce is challenging Premier Greg Selinger to call a referendum following his plan to increase the provincial sales tax to eight per cent. It is imperative that he respect the province's current balanced-budget legislation, which clearly states an increase to the PST can only be done following a referendum.
Besides the government's refusal to allow Manitobans to have their voice heard in a referendum, the chamber is also concerned with how this proposed tax increase will make our already uncompetitive tax framework even more unattractive. We also take issue with how the provincial government intends to spend the $277 million that will be generated annually with a PST increase from seven to eight per cent.
The province has indicated this money will go into the Manitoba Building and Renewal Plan and be used "to support flood-prevention infrastructure, as well as additional capital investment -- from hospitals to hockey rinks, from schools to splash pads."
The challenge with infrastructure investment in Manitoba is that it is like shifting sand -- monies flow between departments, between operating and capital budgets, between the three levels of government, between fluctuations in gas-tax revenues and between administration and hard capital investments.
The end result is that the application of this additional $277 million will be far from transparent in the current proposal and it will be impossible to assess whether this is new investment or just replacing the already-existing infrastructure spending in these areas.
In fact, according to the province's own budget documents the 2013 budget is projected to spend $1.799 billion up from $1.719 billion in the past year, an increase of only $80 million. And of that increased amount, only $30 million has been earmarked for 200 Manitoba municipalities. Winnipeg will receive $14 million for residential streets, compared to $7 million last year.
The other troubling aspect to what the government is doing is they are trying to portray this as a solution to municipal infrastructure challenges in the province -- but have not provided a transparent argument. There is no clear 10-year plan, no public dialogue, no support from municipalities and no sense of outcomes.
There is no value in investing in refurbishing highways that take you to communities that have no fiscal capacity to invest in reasons for you to drive there.
Instead of a one-percentage-point increase to the PST, the chamber recommends a different approach to deal with the infrastructure deficit, which starts with the Selinger government developing a long-term strategy to address Manitoba's municipal infrastructure needs.
As part of that approach, we would recommend the province identify the criteria for municipal access to new revenue streams, including legislation dedicating and restricting all new revenues to municipal infrastructure.
And rather than implementing a broad-based increase to the PST we have recommended the province provide municipalities with the authority to implement a municipal infrastructure levy.
The rationale for this is municipalities are the levels of government most affected by the infrastructure deficit yet have the least amount of fiscal resources to address the needs of their community. By allowing them the authority to implement an infrastructure levy, it provides them with the opportunity to raise revenues to fund predetermined strategic infrastructure priorities.
In addition, as part of that process we would also ensure the public has input into this process through a binding referendum. A referendum provides such benefits as clarity of purpose, transparency of investments and greater accountability in the reporting of results and it shows respect for the hard-working taxpayers of Manitoba.
To ensure greater accountability and transparency, we have recommended the government establish a protocol that requires annual public reporting and five-year public reviews to measure progress against a 20- to 25-year infrastructure plan.
By simply expecting Manitobans to accept a $277-million tax increase with no long-term plan that will increase economic development in the province and no opportunity to have their voice heard, we think the government is providing a disservice to citizens.
If Selinger believes increasing the PST is in the best interest of Manitoba and will create a strong competitive economy, then his government should be prepared, willing and enthusiastic to engage Manitobans and take their proposal to the people.
We would urge Manitobans to contact their local MLA and demand the current balanced-budget law be upheld to ensure no tax increase occurs without a public referendum.
Dave Angus is president and CEO of the Winnipeg Chamber of Commerce.