Manitoba government cuts some taxes, sets money aside for emergencies

WINNIPEG — The Manitoba government is keeping a tight leash on spending and delaying some promised tax cuts as it prepares for the economic fallout from COVID-19.

The Progressive Conservative budget released Thursday follows through on some tax-cut promises from the election campaign last year when the Tories won their second-straight mandate.

Probate fees on deceased person’s estates are to be eliminated July 1. Vehicle registration costs are to be cut 10 per cent on the same day. And the provincial sales tax is to be removed from income-tax preparation services starting Oct. 1.

But two other election promises — removing the sales tax from home insurance and salon services — will wait until next year, Finance Minister Scott Fielding said.

A prime focus of the 2020-21 budget is preparing for emergencies. The government is putting another $300 million into its rainy-day fund and doubling to $100 million the amount it sets aside for emergencies.

The budget predicts that COVID-19 could cut economic growth by as much as half and induce a brief recession.

“Every economic projection is for a recession because of the impact COVID-19, so we have to be realistic about that,” Premier Brian Pallister said.

Opposition NDP Leader Wab Kinew said the budget contains little help for people facing temporary layoffs or having to go on sick leave because of the pandemic.

“Some people are going to be getting 55 per cent of their normal income,” Kinew said.

“The province should now be stepping in with additional assistance to make sure that families can get through this period.”

The budget’s only significant tax increase is on tobacco. It works out to $1 per carton, starting July 1. It’s aimed at offsetting a previously announced cut in the provincial sales tax, so that the cost of smoking remains the same.

The budget also keeps annual spending increases in areas such as health and family services below two per cent.

Family services funding, which includes child welfare, is to be relatively flat. And the government has a five-year plan to get out of owning public housing.

Fielding said the government already provides subsidies to private and non-profit housing, and the change could shorten wait times.

A poverty-rights group said it was not convinced.

“There has been no new social housing units since 2016 and this budget is on track to continue that trend,” Michael Barkman of Make Poverty History Manitoba said.

The Winnipeg Chamber of Commerce said the government should delay a previously announced cut to the provincial sales tax slated for July 1 and use that money to help municipalities defer property, business and school tax collections for at least two months.

But Pallister said the sales tax cut will help people by leaving them with more money in their pockets.

The budget was originally slated for March 11, but was stalled by the New Democrats for eight days, along with some 20 government bills.

The budget forecasts a deficit of $220 million, down from $325 million in the current fiscal year that ends March 31.

That figure does not include additional fiscal pain caused by COVID-19.

At this early stage, the government estimates health costs throughout the fiscal year could rise between $50 million and $200 million. Reduced economic growth could lower government revenues by anywhere from $160 million to $682 million.

Shortly after the budget was introduced, the legislature rose indefinitely due to COVID-19 concerns. Politicians, staff and others in the building have a hard time with social distancing while the assembly is in session, Pallister said.

Asked whether politicians might reconvene in another venue, Kinew said many options are on the table.

“What got approved in the house so far does give the Speaker and the (party) house leaders the ability to set a different location and to make other … precautions around social distancing.” 

This report by The Canadian Press was first published March 19, 2020

Steve Lambert, The Canadian Press