Manitoba extends gas-tax break to farmers

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This article was published 01/12/2023 (685 days ago), so information in it may no longer be current.

The NDP government is offering a million-dollar break to farmers, who were initially left out of its fuel tax holiday, while betting on a forthcoming grocery ‘code of conduct’ to guarantee food costs fall with prices at the pump.

Finance Minister Adrien Sala has proposed three amendments to the NDP’s first affordability bill, which will halt collection of the 14-cent per litre provincial fuel tax for six months.

The amendments, if adopted, would pause the three-cent per litre tax on marked gas used in farm operations and remove clauses that seemed to restrict the use of discounted gas on off-road trails and waterways.

“We’ve been crystal clear to date that this fuel-tax holiday would be for all Manitobans, but there was some concern that that wasn’t clear in the bill,” Sala said Friday. “So, we’ve made small changes to ensure that there’s no longer any confusion.”

Including marked gas — also known as dyed gas — will cost the provincial treasury $1 million over a six-month period, bringing the total estimated cost of the tax break to $164 million.

If the bill passes before legislators rise for the winter break, the tax holiday would kick in on Jan. 1.

Propane will not be included despite calls from industry and the Progressive Conservatives, Sala said.

“It would have required a compliance and enforcement regime which could have been quite costly,” the minister said.

Sala said he has “every reason to believe” the price at the pump will drop on Jan. 1, if the bill becomes law, based on experiences of other jurisdictions.

The finance department, however, has not planned any formal monitoring of gas prices during the tax holiday period.

“In the other Canadian jurisdictions where this was done, those savings were passed on to consumers, so we can say with confidence that that is what’s going to happen here in Manitoba,” Sala said.

On Friday, the PCs questioned whether pausing the fuel tax will result in savings at the grocery store as the NDP has argued.

A day earlier, Premier Wab Kinew told Association of Manitoba Municipalities members gathered in Brandon at their fall convention that the government will take action if prices at the grocery store do not reflect reduced transportation costs for large chains.

“Is the premier an expert on Texas crude prices? Or is he planning to go to the grocery store weekly and price-check Sugar Pops and farmer sausage? Or how exactly does he plan to plug another hole in legislation,” Tory Kelvin Goertzen asked.

Kinew shot back by saying the Tories failed to give Manitobans a break on the fuel tax when they were in government.

While the province will keep an eye on prices, it will also rely on an industry-led, voluntary grocery code of conduct to keep costs in check, Agriculture Minister Ron Kostyshyn said in an interview.

“We just want to have fair, transparent prices for the consumers going through the grocery stores,” Kostyshyn said.

The industry-developed code is intended to strengthen the supply chain and increase fairness, according to the federal government.

The code is close to completion and is expected to be in place by the end of the first quarter of 2024.

Kostyshyn said he’s been in discussions with federal Agriculture Minister Lawrence MacAulay as part of federal-provincial-territorial meetings on the code of conduct.

He declined to elaborate on how the government can ensure the tax revenue that will bee sacrificed will benefits consumers at the grocery store.

“At this point in time, it would be somewhat inappropriate for me to make a comment,” Kostyshyn said, citing ongoing work and discussions on the code of conduct. “I just want to reaffirm that we anticipate that that cost saving will be passed on to the general consumer.”

Kostyshyn said he’ll have more to say on the subject in the near future.

Tory agriculture critic Jeff Bereza called the proposed amendments to the fuel tax bill a good first step, but said he’s skeptical it will result in shoppers getting a deal at the grocery store.

“The federal carbon tax… is also a huge impact on our farmers,” Bereza said. “It’s grain that’s being dried, it’s barns that are being heated, so again there’s a huge cost to all that.

“I can’t see where this is going far enough to affect the grocery prices going down.”

— with files from The Canadian Press

danielle.dasilva@freepress.mb.ca