PST reduction and flat carbon tax: Manitoba going in the wrong direction

For Immediate Release (Winnipeg): The Manitoba government’s announcement today of a PST reduction to 6% and a flat carbon tax is very concerning, says the Canadian Centre for Policy Alternatives (CCPA) – Manitoba.  

The PST was already reduced from 8% this past July. A one percentage reduction in PST costs the Manitoba government approximately $325 million annually. Research for the Alternative Provincial Budget found Manitoba government revenues have already fallen relative the size of the economy since 2006/07, equivalent to a loss of $1.9 billion in revenue annually for program expenditures. This starves revenues to public services and to deal with the climate crisis. Manitoba’s program expenditures per capita are below the National average.  

The Manitoba government announced today that a “flat Green levy” will be put in place to fund the PST cut. It also promises that this levy will be returned to Manitobans. It is unclear how a levy returned to households will fill the hole in the budget created by the PST reduction.

This change will be regressive from a pure taxation perspective, since the PST excludes many basic necessities and a carbon tax is applied to necessities like gas and natural gas.   A carbon tax only works as an incentive from a climate change perspective if people have the ability and capacity to modify their behaviour.  The lack of alternatives mean it’s a regressive tax.  A failure to invest in municipal and interprovincial transit, eliminating the 50/50 operating agreement on transit with the City of Winnipeg, cutting low income housing programs and inaction on climate mitigation means there is an inadequate investment to deal with the climate emergency.   

The “flat Green levy” is a far cry from what climate scientists and economists tell us necessary to tackle climate change. The United Nations IPCC report the carbon tax should be set equal to the social cost of carbon, which is the estimated damages caused C02, and that this should increase over time with compensation to low income households. A flat $25 per ton tax fails on both counts.  

This past Tuesday, March 3rd, the CCPA Manitoba released “Change Starts Here: Manitoba Alternative Provincial Budget 2020”. The fully costed budget cuts poverty rate in half, reverses the cuts to public services and introduces a carbon levy of $30/ tonne with $100 million rebate for low and moderate income households with the remainder of the levy allocated to green infrastructure needed for Manitoba to enhance green public transportation and home retrofits. The APB restores the PST to 8%. Instead, the province continues with regressive and short-sighted changes that worsen income inequality and the green infrastructure deficit.  

CCPA  is a charitable research institute, active Nationally since 1980 and in Manitoba since 1997.    

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