Yearlong holiday runs out of gas; province reinstates 10 per cent lower fuel tax

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This article was published 23/12/2024 (290 days ago), so information in it may no longer be current.

Premier Wab Kinew ended Manitoba’s yearlong gas-tax holiday Monday, but eased the pain slightly by announcing a 1.5-cent per litre cut in the levy going forward permanently.

The province, which revealed last week that its projected 2024-25 deficit had risen by a half-billion dollars, will reinstate a 12.5-cent per litre tax on Jan. 1.

Cutting the 14-cent-per-litre tax — initially announced as a six-month affordability measure that was extended twice, each time for an additional three months — cost Manitoba an estimated $340 million in lost revenue in 2024.

“Our government keeps our word,” Kinew said in a news release Monday. “We said we’d cut the fuel tax and we did. We said it would last 12 months and it did. Now we’re going further by bringing in a permanent cut to the fuel tax to make it one of the lowest in Canada.”

Manitoba reported the lowest gas prices in Canada throughout 2024, and some of the lowest monthly inflation rates among provinces.

The province expects to collect $78 million per quarter from the 12.5-cent-per-litre fuel tax, representing a revenue loss of $28 million over the fiscal year, compared to the estimated $340 million that would have been collected at 14 cents per litre.

Finance Minister Adrien Sala didn’t say why the government decided to cut the tax by 10 per cent or how it arrived at that figure.

“We knew that the gas tax holiday had an enormous impact for Manitobans in saving them money,” Sala told the Free Press Monday. “Manitobans continue to face affordability challenges and we wanted to make sure we continue to provide them the help that they need,” he said.

Sala said the cut on the gas tax, which represents 10 per cent, and the Manitoba Hydro rate freeze that also goes into effect Jan. 1, “will help to make life more affordable for Manitobans.”

While the premier and his finance minister referred to the fuel tax reduction as “permanent,” the government passed controversial omnibus legislation Nov. 7 that allows cabinet to change fuel tax rates by regulation rather than through legislation.

“It’s permanent in that we’re committed to bringing forward a 10 per cent cut toward fuel taxes,” Sala said.

Reinstating the gas tax is the responsible thing to do, say those who questioned the NDP government’s decision to remove the fuel tax in 2024.

“The government needs this revenue for public services and infrastructure we all rely upon,” said Molly McCracken, Manitoba director of the Canadian Centre for Policy Alternatives.

Manitoba’s projected deficit for fiscal 2024-25 is $1.3 billion, $513 million higher than forecast in its 2024 budget.

McCracken guessed one in five Manitobans derived no benefit, presumably because they don’t own vehicles.

“It is time the Manitoba government helps those most affected by the affordability crisis, boost abysmal social assistance rates to bring down skyrocketing food bank use and improve transfers to municipalities for public transit for quality, low-cost transit,” she said.

Progressive Conservative finance critic Lauren Stone said replacing the tax holiday with a 12.5-cent-per-litre levy represents “the largest gas tax increase in Manitoba history.”

“It’s clear this measure is about funding the NDP’s massive $1.3-billion deficit on the backs of Manitoba families rather than providing meaningful affordability relief,” the member for Midland said in a prepared statement.

The Canadian Taxpayers’ Federation wasn’t impressed, either.

“Kinew is giving Manitobans higher taxes for Christmas,” prairie director Gage Haubrich said in a news release.

A Manitoba family making $75,000 per year will pay more in 2024 provincial taxes than a similar family in B.C., Alberta, Saskatchewan and Ontario, the release said, adding a family filling up a minivan and a pickup truck every two weeks will pay $526 a year in fuel tax in 2025.

With a provincial election not due until the fall of 2027, the NDP government picked a good time to reinstate the fuel tax, said University of Manitoba political studies professor Christopher Adams.

“If people are disgruntled about it, there isn’t an election for close to three years from now. So this is the time to do it. It’s not the time to do it in two or three years. If you’re going to take political flak for it, this is the time to do it.”

Adams said it’s no surprise that a gas tax holiday linked to the high rate of inflation is ending now that the inflation rate is under control. The fuel tax suspension wasn’t embraced by many in the party’s base, including environmentalists and those worried about the province’s deficit and financial outlook.

“This is kind of a compromise position — bringing back most of the tax, but not all of the tax, which is kind of a clever thing to do,” he said.

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Rather than a gas tax reduction, Manitoba should impose a much higher fuel tax in response to the climate crisis, said McCracken.

“Canada has extremely low gas taxes compared to other (developed) countries,” she said. “Fossil-fuel revenue like the gas tax should be targeted to making transportation more affordable due to Manitoba’s hydroelectric advantage — electrify and make public transit a viable choice and help people paying volatile corporate gas prices.”

McCracken dismissed the taxpayers’ group complaints about affordability, saying its prairie headquarters are in Saskatchewan and that it doesn’t recognize cost-of-living advantages in Manitoba.

Manitoba has the second-lowest hydroelectricity rates on the continent and MPI, the publicly owned auto insurer, she said, making Manitoba a “very competitive and affordable place to live.”

carol.sanders@freepress.mb.ca

Carol Sanders
Legislature reporter

Carol Sanders is a reporter at the Free Press legislature bureau. The former general assignment reporter and copy editor joined the paper in 1997. Read more about Carol.

Every piece of reporting Carol produces is reviewed by an editing team before it is posted online or published in print — part of the Free Press‘s tradition, since 1872, of producing reliable independent journalism. Read more about Free Press’s history and mandate, and learn how our newsroom operates.