Hey there, time traveller!
This article was published 16/4/2013 (1165 days ago), so information in it may no longer be current.
Politically naive governments cope with crisis. Savvy administrations see political opportunity when turbulence shakes the confidence of taxpayers. Manitoba's NDP has honed the art, manufacturing crisis from a flood that has yet to happen, to justify a sales-tax hike that will grab $300 more out of the pockets of families.
Increasing the PST from seven to eight per cent will dump $198.5 million this year into a dedicated infrastructure fund which, over the next decade, will pay for largely routine provincial priorities -- schools, hospitals, highways, municipal infrastructure projects. In 2015, that revenue rises to $277 million.
But Finance Minister Stan Struthers, in defending the tax hike Tuesday, appealed to Manitobans' patriotism -- we must pull together to meet a real peril that threatens to undermine our way of life. That peril, he said, is flood, and as the cost of past and future events hit home, it is undermining the ability to pay for critical services such as health, education and protecting children.
On cue, there is yet another rising tide upon us this spring. "Manitoba families are under threat because of a third flood in five years," he intoned ominously.
But unravelling the potential of that financial threat reveals the truth of Mr. Struthers' opportunity. The 2013-14 budget shows the province is putting $30 million aside to fight 2013 flooding, but expects federal disaster assistance to underwrite $27 million. So $3 million directly hits a bottom line that this year ends with a $515-million deficit.
The NDP notes it must pay for the string of infrastructure and planning measures recommended by reviews of the historic 2011 flood, pegged to cost $1 billion by Flood Minister Steve Ashton. Some are already being implemented. Many should be covered by federal cost-shared deals under the new Building Canada fund. (The expired deal saw Ottawa put $576 million into Manitoba infrastructure projects over five years.)
Conditions have conspired to hand a government infatuated with deficits and a proven spending problem the best of circumstances to raise taxes. This is a government that has blown budgeted expenditures throughout its 13 years in office, even as record transfers from Ottawa have hiked revenues.
Municipal and construction lobbies have called for years now for a one-percentage-point hike in the PST to fund infrastructure; this increase to eight per cent from seven per cent puts only a promised $30 million more into the $270 million now spent on municipal infrastructure projects.
Over a decade, the additional tax will pour $3 billion into the dedicated Manitoba Building and Renewal Plan. Even were $1 billion of that to be spent on future flood-fighting and defences, the government has $1.7 billion or more to cover routine spending that has been borne, until now, by the provincial treasury.
In Mr. Struthers' world, this is not a tax hike, but a chance for Manitobans to protect themselves and the province from the threat of future floods. If that were so clear, the government would follow the law and put this PST increase to a vote. Mr. Struthers said he will do no such thing. He plans to start spending the money now, after speedy passage of new legislation to override the balanced-budget law. That law, once a covenant for careful fiscal management, is now gutted.