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Selinger's ability to sell case weak link in tax-hike plan

Hey there, time traveller!
This article was published 2/5/2013 (1571 days ago), so information in it may no longer be current.

Two weeks into its post-budget strategy, and things are unfolding more or less according to plan for Manitoba's NDP government.

As everyone knows by now, Premier Greg Selinger introduced a budget that increases the PST to eight per cent from seven per cent to pay for infrastructure. The NDP strategy for selling the hike is relatively simple: hold fast and ride out the initial wave of anger; make as many "good-news" announcements as possible to show the new revenue at work; and hope the public eventually, even grudgingly, sees it as a necessary evil to get better infrastructure.

Two parts of the strategy have come to fruition. First, Selinger has held fast despite a very negative response. Even those groups that support the theory of raising the PST to pay for infrastructure are critics. To defuse this anger, Selinger is implementing the second phase of his strategy, namely the announcement of projects he claims were made possible by the tax hike.

Will all that add up to grudging acceptance? It's hard to see that happening, even over the long term. Selinger has simply not done a good job at enunciating his case. Even though it's still early in the debate, this is fast becoming one of the worst-managed issues in the province's political history.

Communication has been muddled, the arithmetic has been sloppy and Selinger has made no move to apologize for introducing a tax increase he spent so much time saying he would never bring forward. It's OK to change course, but an act of contrition would likely help Selinger in his bid to sell the tax hike. It's likely worth a try. Right now, the premier is drowning in anger, with nobody willing to throw him a line.

Selinger now faces a challenge from three distinct constituencies: the vehement opponents; the tacit supporters; and those folks who will support the PST hike if the price is right.

In the first category, you have the provincial Progressive Conservatives, the Canadian Taxpayers Federation and the Canadian Federation of Independent Business. All believe government should never raise taxes, for any reason.

In the category of tacit supporters, you find the Winnipeg Chamber of Commerce, Manitoba Heavy Construction and the Business Council of Manitoba. These groups, in principle at least, favour a higher PST to fund infrastructure. However, they all reject the way the province is implementing the increase. They want to discuss how best to spend the money, and a referendum, as required under provincial law.

In the last category, you will find municipal leaders including Winnipeg Mayor Sam Katz. Last week, Katz and some other mayors met at Winnipeg City Hall for a show of force. They neither denounced the idea of a PST bump nor demanded a referendum. Instead, they asked the province to give them all the revenue from the PST increase without any strings attached. It's rare to see politicians hold a news conference to outline exactly how much it will cost to buy their support. This was one of those rare moments.

All this is to say it's almost impossible to find common ground on the tax hike. Nonetheless, Selinger could win back some support by adopting as many reasonable suggestions on how best to administer the new revenue. Quietly, some of the major stakeholders are conceding that even without a referendum, they could still support the tax hike as long as there is advance discussion on how to get the biggest bang for these bucks.

That is not to say these groups do not believe a referendum is the right way to go. Only that at some level, they know what Selinger knows, which is that a referendum would be an unpredictable gong show. That was certainly the case in British Columbia's 2011 referendum on the harmonized sales tax, a fight that has a good many similarities to the situation Selinger now faces.

In B.C., the Liberal government announced it was adopting the HST after years of dismissing the idea. (Almost identical to Selinger doing something he rejected for several years.)

The business community was front and centre with the Liberals in the pro-HST campaign, arguing increased tax credits would make B.C. more competitive, create more jobs and grow the economy. (Similar to arguments the business council and chamber made here in favour of a higher PST for infrastructure.)

In the end, the HST fell victim to a vigorous campaign led by former premier Bill Vander Zalm, a politician who only by the grace of God avoided a prison sentence for breach of trust. Worst of all, it was not a decisive victory. Only half of registered voters cast a ballot. Of those, 55 per cent (or a third of all residents) voted to scrap the HST.

It appears Selinger's potential allies might remain just that because they have the luxury of knowing they can get what they want -- more money for infrastructure -- without any blame, or having to suffer an intractable, unwinnable referendum.

Although it's hard to predict the future, here are two pretty good bets.

You can bet that Selinger will stick to his strategy to sell the PST hike. You can also bet that few will even grudgingly come to his defence.

Read more by Dan Lett.


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