Premier puts grocers on notice as fuel tax break looms

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This article was published 30/11/2023 (685 days ago), so information in it may no longer be current.

Manitoba Premier Wab Kinew expects local grocery stores will lower food prices during a proposed provincial fuel tax holiday — and warned retailers who don’t pass on the savings can count on the government to act.

Speaking to reporters at the Association of Manitoba Municipalities fall convention in Brandon, the NDP premier said he wants to shoppers see immediate savings at their local grocery store, if the 14-cents-per-litre provincial fuel tax is paused in the new year.

A bill currently before lawmakers proposes a six-month halt to kick in Jan. 1. It is expected to pass before the legislature rises for the winter break Dec. 7.

“We do expect that grocery chains will pass on the savings to you when we reduce their transportation costs starting on Jan. 1,” Kinew said. “And if we don’t see those savings materialize, then that’s when we’re going to follow up on those further steps.”

Agriculture Minister Ron Kostyshyn has been speaking with his federal counterpart about what can be done to deliver more affordability at the grocery store level and to ensure fuel tax savings are passed on to consumers, according to the premier’s office.

The premier did not explain what steps the province might take to ensure the private businesses pass on a commensurate level of savings to their customers.

However, in the short term, when retailers save money, consumers should, too, Kinew said.

“We do expect that grocery chains will pass on the savings to you when we reduce their transportation costs starting on Jan. 1 … And if we don’t see those savings materialize, then that’s when we’re going to follow up on those further steps.”–Wab Kinew

“The inventory in the large grocery chains is turned over quite regularly, so if transportation comes down on Jan. 1, we hope that you start to save money right away.”

Grocery prices at the Food Fare on Cavalier Drive in west Winnipeg will come down as long as the wholesale prices also drop, store manager Wajih Zeid said.

“Assuming that the fuel tax lowers prices from our suppliers, that’s what determines the big savings,” Zeid said Thursday. “That’s where it all starts. If prices go down from there, it will come down in our store, for sure.”

However, the local grocer said he is skeptical prices farther up the supply chain will come down if Manitoba’s fuel tax is paused.

“That’s something we have to wait and see. All we’ve seen for the last year-and-a-half is increase after increase after increase.”

The price Manitobans pay for food is a confluence of many factors, most of which are beyond the control of grocery retailers, said John Graham, government relations director for the Retail Council of Canada.

The council’s grocery sector members include Loblaw Companies Ltd., Costco Wholesale, Sobeys Inc. and Walmart Inc., among others.

As most products are sourced outside the province, the benefits of a provincial fuel tax reduction is primarily on the last kilometres, Graham said.

“As retailers compete heavily on pricing, everything helps to drive down prices,” he said.

“But the reality is the Manitoba specific fuel tax is just one of many integrated costs reflected in a product’s price, making it hard to clearly identify a cause and effect for consumers.”

“It would be good to give people an opportunity to be a little less stressed and not have grocery shopping be a burden.”–Wajih Zeid

Foreign wars, extreme weather, labour shortages and a weak Canadian dollar are just some of the other pressures that cause food prices to rise, Graham said.

“If we are talking a gas pump price, there would be a natural direct line that consumers should expect to see.”

He added grocers would welcome a more comprehensive discussion with the new provincial government about ways to reduce red tape and government costs that drive up the price of food and other retail products.

The proposed fuel tax holiday is one of the NDP government’s primary affordability measures and was a main plank of its recent election campaign.

When the bill was first introduced last week, the premier said people who do not own vehicles or buy gasoline will see savings trickle down as the cost to transport food and other goods drop.

“Grocery stores have told us persistently that transportation costs are one of the reasons they’re raising prices on you, the consumers. We’re calling their bluff here today,” Kinew said at the time.

Consumers Association of Canada-Manitoba board member Peggy Barker said there should be no doubts the fuel tax holiday — which will cost the provincial treasury $163 million over six months — is the best way to provide support for those who are most in need.

“CAC Manitoba has always felt that changes in the marketplace should be transparent and clearly communicated,” Barker said. “If vendors are able to achieve savings because of the gas tax holiday provided by the taxpayers of Manitoba, then it should be the taxpayers of Manitoba that benefit.”

Zeid said he’s seen his customers hurting as prices have gone up.

“In a small store like ours, we get to know a lot of our customers… and it’s noticeable that basket sizes are smaller. It’s noticeable that buying habits have changed,” Zeid said. “It would be good to give people an opportunity to be a little less stressed and not have grocery shopping be a burden.”

danielle.dasilva@freepress.mb.ca