Building the taxes

Where is the HST debate in Manitoba?

One issue that was conspicuously absent from the provincial election debate was the possible introduction of the Harmonized Sales Tax (HST) in Manitoba.

There has been little if any intra-party debate on the issue. Due to lukewarm response from the parties regarding the HST, little media attention has been devoted to it in Manitoba.

Perhaps there is justification for this lack of coverage. Many people don’t like the idea of the tax because it is applicable to PST-exempt services like haircuts and movie tickets.

According to a Manitoba Finance Report (MFR) in December 2009, HST would negatively affect the financial, insurance and medical sectors. Renters and Manitoba government revenues would likely also be affected.

However, according to the same report, the benefactors of HST would be export-market businesses, the construction industry, the retail industry, single people with income under $20,000, one-parent families with income under $30,000 and consumers of exempted items such as books.

Another benefit would be government savings of $12 million from not having to collect PST. 

With potential benefits to the construction industry, it’s surprising to see that Mike Moore, President of the Manitoba Home Builders Association (MHBA), is against the implementation of the HST.

With all the potential benefits, it’s surprising to see that the President of the Manitoba Home Builders Association is against the implementation of the HST

Moore argues against the HST because it would lead to higher taxes on new homes, which may harm the construction industry.

Yes, the HST would lead to higher taxes on new homes, which may dissuade buyers, but the construction industry would be one of the larger benefactors of moving to an HST model (with gains of $267 million a year), due to a reduction in input costs.

Legitimate businesses would benefit from the tax, hopefully encouraging corrupt contractors to go legit, dispelling Moore’s latter concern.

This model should lead to lower costs being passed onto new home buyers, thereby making the larger HST tax expense-neutral. Furthermore, the MFR includes a new home exemption in its calculations.

I use the MHBA as an example because their concerns outline the potential wider effects of the tax.

If tax savings to businesses are passed on to the residents of Manitoba through an increase in exports, an expansion of the corporate tax base, lower prices and more hiring, then the HST is positive and potentially a more equitable tax.

If these do not occur, Manitoba is left with higher consumer prices and a decrease in tax revenues.

In 2009, the MFR recommended that the Manitoba government not move toward adopting the HST, due to an uncertain economic climate.

Despite the objections to it, it’s easy to see how the HST could have lead to some productive debate during the provincial election.

Lucas Redekop is a mature student at the University of Winnipeg with an interest in civic discourse. He lives in West Broadway.

Published in Volume 66, Number 6 of The Uniter (October 5, 2011)

Related Reads