Businesses still pushing for blended sales tax

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This article was published 18/11/2009 (5843 days ago), so information in it may no longer be current.

ADOPTING a harmonized sales tax that raises consumer costs would be the wrong signal to send during an economic downturn, Manitoba’s finance minister says.

In an interview Tuesday, Rosann Wowchuk confirmed the province will not implement the HST in next year’s budget.

"As we do the analysis, we just do not see… that it (implementing the HST) is in the best interests of our consumers or the province at this time," she said.

Manitoba business leaders have been pushing for harmonizing the five per cent federal GST with the seven per cent provincial sales tax to create one 12 per cent tax, saying it would create administrative efficiencies and lower business costs.

But the province has balked, saying consumers would be on the hook for $400 million a year in additional costs, while the provincial treasury would take a similar hit.

Manitoba businesses might be the only winners, gaining a half billion dollars in cost savings.

A harmonized tax would be more costly for consumers because it would apply to products and services on which only one tax is currently charged.

The province has thoroughly analyzed the issue, Wowchuk said, and is putting the finishing touches on a report that will be released in the next week or two.

Wowchuk said Ottawa has also failed to offer sufficient cash incentives to Manitoba.

"The federal government has offered some money," she said, but it’s lump-sum payment. "If you take the one-time money this year, what about next year?" she said.

On Tuesday, the Winnipeg Chamber of Commerce called a press conference to pressure the Selinger government to implement the blended tax, fearing Manitoba businesses will be at a great disadvantage compared to other jurisdictions.

Failure to act "will have a significant influence on our ability to be able to attract investment, to attract companies and jobs and, frankly, to be able to keep our current businesses here in Manitoba," chamber president Dave Angus said.

Angus called for the establishment of an all-party committee of the legislature to consult the public on the issue.

But Wowchuk questioned whether such a committee would add to the debate when her department had already analyzed the costs and benefits of adopting an HST.

Opposition Leader Hugh McFadyen said Tuesday there is no sense convening such a group, since the NDP had already made up its mind.

Wowchuk said the provincial government will monitor the experience with the HST in other provinces, including Ontario and British Columbia, which are set to jump on board July 1, 2010.

By then, provinces representing 94 per cent of Canadians will be using the HST, according to the chamber.

larry.kusch@freepress.mb.ca