The gas tax returns for January — but not completely

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This article was published 27/12/2024 (298 days ago), so information in it may no longer be current.

So, how decisive and definitive was Premier Wab Kinew’s long-awaited move on the provincial fuel tax?

One media outlet’s story describing his announcement initially carried this headline: “Province to make permanent cut to gas tax.”

On another outlet’s website, meanwhile, this headline appeared: “Gas tax to return to Manitoba on New Year’s Day, premier says.”

Did one outlet get it right, while the other was somehow confused?

As it turns out, the decidedly divergent headlines could each be defended as accurate, owing to the “sort of” manner in which the Kinew government handled the end of the so-called “gas-tax holiday” enacted last January as an offering of inflation relief.

A third media outlet’s headline probably best encapsulated the province’s waffling approach to addressing the scheduled end of gas-tax relief: “Manitoba government to reinstate fuel tax at a lower rate.”

Kinew announced — finally — on Monday that the tax, whose suspension was originally scheduled to last until midsummer but was subsequently extended through year’s end, will be brought back on Jan. 1, but at a rate of 12.5 cents per litre, down 1.5 cents from the previous rate of 14 cents per litre.

Why? Well, that’s anybody’s guess. Finance Minister Adrien Sala offered few insights into the decision-making process behind the trim of the tax, leaving the not-quite reinstatement of the provincial fuel tax as confounding as the granting of the “holiday” in the first place.

When it was introduced in January of this year — delivering on a promise issued during the previous fall’s election campaign that swept the NDP into power — Kinew declared it would not only bring direct at-the-pump relief to inflation-weary Manitobans, it would also prompt lower grocery prices because decreased transportation costs for grocery companies would (naturally) be passed along to consumers.

Kinew added that if those lower prices didn’t materialize, he would hold grocers to account. He declined, at the time, to explain how. Not much has been heard in that regard since.

But the bottom line on gas-tax relief making life easier for Manitobans is this: as many observers of matters political and economic quickly pointed out, the measure provided precious little relief to those who most need it.

A great many of the province’s most vulnerable — perhaps one in five Manitobans, according to the Canadian Centre for Policy Alternatives — derived no benefit, presumably because they do not own motor vehicles and therefore would have no occasion to be standing at a gas pump marvelling at the 14-cents-per-litre saving.

The tax holiday benefited those relatively well-off Manitobans who can afford to drive cars, trucks and SUVs; the more gas one’s vehicle guzzles, the more saving could be achieved.

In other words, temporarily removing the fuel tax had more to do with the show than the dough; it was populist political posturing at its finest.

In the end, the ill-considered fuel-tax vacation is estimated to have removed some $340 million from the provincial coffers — no trifling amount for a government whose recent fiscal update suggested the year’s budget deficit will be $500 million higher than originally forecast.

Since taxes of any kind — new, increased, reinstated or otherwise — tend to be unpopular, one can only presume the premier is bringing back the provincial fuel tax simply because he can’t afford not to.

As for the token 1.5-cent holdback on the tax’s resumption, well, that seems just a lesser level of favour-currying gas-pump gimmickry than the tax itself, from which some were granted a temporary reprieve at great cost to the province’s bottom line.