Manitoba PST hike may face legal challenge

The Canadian Taxpayers Federation is looking into a possible legal challenge of the Manitoba government's plans to raise the provincial sales tax to eight per cent.

The NDP government announced in its budget this weekthat the PST will go up by one percentage point, from seven per cent to eight per cent, starting July 1.

The higher tax will be in effect for the next 10 years to cover costs related to infrastructure and flood prevention.

But Colin Craig, the federation's Prairies director, says a tax hike could be bad for Manitoba's economy.

"Re-instill stability in this economy because when you make decisions like this, you scare the you-know-what out of businesses and people that are potentially looking at either investing here or even moving here," he told reporters outside the legislature Friday.

Craig said the federation is looking into the possibility of launching a legal challenge over the PST hike.

Instead of raising the tax, he said Premier Greg Selinger should instead be cutting spending a point that wasalso raised by Progressive Conservative Leader Brian Pallister on Thursday.

On Friday, Pallister and the Tories launched Stand Up Manitoba, a campaign urging Manitobans speak out against the PST hike.

According to the party, the additional tax will result in an extra $1,200 that an average Manitoba family of four will have to pay.

Reduce cabinet size, federation suggests

The easiest and most obvious first step, Craig said, would be for Selinger to cut four cabinet positions.

"I think that's something the premier should easily be able to decide," he said.

"If he can't figure it out, he can talk to Gary Doer because for years, Gary Doer got by with a smaller cabinet."

The cabinet currently consists of 19 ministers, including Selinger. Doer's cabinet had 15 members when he took office in 1999, said Craig.

Selinger has been facing criticismfrom a number of groups over the PST hike and changes to the province's balanced budget legislation that allows the tax to be raised without the need for a referendum.

The province changed the same legislation last yearso that cabinet ministers would be docked 20 per cent of the top-up salary they receive, instead of 40 per cent, for years there is a deficit.

When asked why cabinet ministers should not take a bigger pay cut, given the PST backlash, Selinger said Manitoba is the only province that is docking ministers' pay.

"No other level of government running a deficitand that includes the federal government or other provincial governments is doing that. And no other level of government that's raising taxes is doing that, including at the civic level," he told reporters Thursday in Brandon.

"We think we're being very responsible in that regard in showing leadership by putting less money in the pockets of cabinet ministers."

Housing, Pharmacare announcements

The government made a couple of funding-related announcements on Friday, including a new tax credit that will help create more than 1,000 rental housing units.

Housing and Community Development Minister Kerri Irvin-Ross said the Residential Rental Housing Investment Tax Credit will provide an eight per cent credit on construction costs for private developers to build new affordable housing units.

The province also announced it is adding 81 new prescription drugs to Manitoba's Pharmacare program.

The drugs that are being added include HIV drugs, a pediatric-strength version of Tamiflu and medications for heart disease, diabetes and hypertension.

The move will save families $3.7 million a year and save taxpayers about $2.5 million annually, the government said in a release.