Friday, 19 April 2013

MB Budget 2013: Five Lies

Lies ... So many lies ... It makes me sad.

I am not happy about the PST hike -- few people are -- but for me the worst aspect of this week's budget announcement wasn't the tax increase itself but all of the lies that accompanied it. I appreciate honesty. I may not like what you're doing, but if you're honest about why you're doing it and have a good reason for doing so, I will not resent your actions.

But that is not the case here. There is a tremendous arrogance in how the government delivered this budget that I'm finding hard to articulate, so let's just get on with the show ... here some of the more grievous lies from this week's budget announcement:

LIE: The tax hike is required for flood infrastructure. Direct quote: "this revenue will help protect Manitobans against flooding." There are 13 consecutive paragraphs in the budget speech about flooding, leading up to the tax increase announcement.
FACT: Spending on water-related infrastructure is actually decreasing $11 million from last year -- from $59m to $48m. This amount also represents a very small fraction of the revenue that will be generated from the tax increase.

LIE. Holding a referendum on the tax increase would make us miss construction season. Direct quote: "We have to get on with it now. The construction season is in front of us."
FACT: This has got to be one of the worst excuses I have ever heard from a politician. I don't even know where to start. How exactly is this supposed to make sense?  You see .. much like pizza at New York's famed Grimaldi's Pizzaria, you can only pay for flood infrastructure in cash, and we ... um ... don't seem to have any cash on us. Do you have any cash Greg? No? Ya, neither do I. Gosh, where are we going to find all that money so we can protect Manitoba families from flooding? This really is quite the conundrum. I think the only solution is to instantaneously raise $48 million on July 1 with a PST hike so that we can get those construction crews working!
As already mentioned, flood infrastructure spending is going down from last year, and in any case these projects can be financed. A referendum has absolutely no bearing on whether a dike gets built this summer.

LIE: Our sales tax rate is still 3rd lowest in Canada. Direct quote: "Our PST will remain third lowest in the country."
FACT: We aren't even the 3rd lowest in Western Canada.
Alberta: 0%
Saskatchewan: 5%
BC: 7%
Manitoba: 8%  4th lowest
Or .. you could look at it this way: we are 4th highest in Canada, lower than only Quebec, PEI and Nova Scotia.
FUN FACT: Two other provinces are decreasing their sales tax, including Nova Scotia. By July 2015 we will be tied for the 3rd highest sales tax rate in Canada.

LIE: The global economy is to blame. Direct quote: "But the economic outlook remains uncertain. The source of that uncertainty lies outside our borders."
FACT: As I've progressed through life I have learned that there are certain phrases that you never want to hear. Phrases like:
"We regret to inform you.."
"I just got my results back.."
"While we have weathered the recession better than most provinces, the global economy remains uncertain.."
If you have the opportunity to pour yourself a scotch before hearing the remainder of any of those sentences I highly recommend it. Anyhow, on with the facts .... revenues for the year that just passed came in at only $200k less than what was budgeted for 2012/13, and those revenues were 3% more than the year before. In other words, the government's revenues are pretty much exactly as anticipated when the Premier said "Ridiculous idea that we're going to raise the sales tax. That's total nonsense, everybody knows that."

LIE. We are on track to balance the budget by 2016. Direct quote: "It will allow us to deliver a balanced budget by 2016."
FACT: The budget does indeed show Manitoba achieving a balanced budget in 2016/17. How? Through spending restraint unlike any we have seen from this government in the past. Spending growth projections are:
2014/15: 1.3%
2015/16: 2.1%
2016/17: 2.1%
For reference, the smallest increase the NDP has budgeted since it came into power in 1999 is 2.5%, and they have averaged spending increases of 4.6%. While it is technically possible for the government to keep this promise, they know very well that they will not.


unclebob said...

Lies, you say! What do you expect from a Premier and a government that simply has no shame.

Brian said...

Good work.

Anonymous said...

Thanks for doing a better job of calling out the NDP than the so-called professional journalists over at the Free Press. Those pieces form Lett, Kives and especially Bruce Owen read more like official NDP press releases than actual news stories.

Anonymous said...

Alberta has no pst. Thus we are the 3rd lowest.

This was an intentional (and disingenuous) part of the speech. The Conservatives should push this one as it is an arrogant statement.

cherenkov said...

@bob: I expect integrity. I think my expectations are too high.

@Brian: Thanks.

@Anon1: Lett's "5 things you need to know about this budget" in particular struck me as an NDP press release, but somewhat in his defense it was done very quickly and he may not have had much opportunity to look at the reality of this budget.

Anon2: Well, PEI and Nova Scotia don't have PST either (HST) so I guess we're really 2nd highest in Canada!

Anonymous said...

All the "lies" you printed are facts & the "truths" you printed are just you complaining.

Anonymous said...

The actual tax increase is not the issue here. Here's what it comes down to:

1) The NDP promised that it would not raise taxes, and it did. That kind of thing rightly does not sit well with the public. People remember things like that. Expect to hear about it from Brian Pallister in the next election.

2) The NDP boxed themselves into a corner on this one. This particular government, since it was elected, has gone out of its way to prove it can reduce taxes like the rest of them. When you reduce revenue, you run the risk of running deficits. The world is moving away from the tax reduction paradigm, where in BC even the Liberals are talking about raising some taxes. Further to point 1, if the NDP had said that taxes need to go up, people wouldn't have liked it, but at least they would be prepared.

3) The NDP wasted its political capital not only by tearing up the referendum law, but by raising a regressive sales tax that negatively impacts a huge section of their base, that being working class and lower income Manitobans. Most (if not all) governments in Canada that implemented a sales tax have paid for it at the polls. A far better approach would have been to raise the basic personal exemption while increasing taxes on wealthier Manitobans, which if done correctly would have raised more revenue than the PST hike. It also would have been a winning campaign for the NDP, since it allows them to claim to be looking out for "the little guy" while forcing the PCs to openly defend the 1%. Ontario NDP leader Andrea Horwath is very popular, largely because of her proposal to tax those making higher incomes. It's a natural fit.

cherenkov said...

Good comments. I disagree on a couple of points.

2) The NDP never really reduced taxes. Any reductions were very modest, and more than negated by increases in fees and "back-door" tax increases, as well as their failure to increase the tax thresholds each year as most other provinces do. Their problems aren't one of revenues but of spending.

3) Wealthier Manitobans are already taxed higher than all provinces but NS and NB. Not sure about Quebec. Nevertheless, you can only punish your wealthy people so much before they decide to take their wealth elsewhere.

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