04/17/2013 04:33 EDT | Updated 06/17/2013 05:12 EDT

Manitoba government introduces tax-hike bill amid opposition protest

WINNIPEG - The Manitoba government wasted no time Wednesday with its plan to raise the provincial sales tax and dodge a referendum on the issue.

One day after announcing the move in the budget, the government introduced a bill that would hike the tax to eight per cent from seven per cent as of July 1. The omnibus bill would also suspend a long-standing section of the balanced budget law that requires a referendum before any sales tax increase.

The opposition Progressive Conservatives used question period to call the bill an attack on voters' rights.

"We believe in the taxpayer accountability act that was put in place to protect Manitobans from this kind of government," Tory legislature member Kelvin Goertzen told the chamber.

"Will the premier please listen to the wisdom of these Manitobans and give them the referendum they are legally entitled to?"

Premier Greg Selinger said the tax increase is needed to pay for new flood-protection measures — 2013 is shaping up to be the third high-water year in the last five. He added there is no time for a referendum because work must begin quickly.

"We cannot afford to lose this year's construction season. This construction season will allow thousands of Manitobans ... to go to work and build a stronger province."

Progressive Conservative Leader Brian Pallister said a Tory government would reduce the tax back down to seven per cent. He promised to spell out on Thursday how he could afford to do that.

The issue is expected to dominate the spring sitting of the legislature and perhaps extend it into the summer.

Manitoba is one of the few provinces with mandatory public hearings on all legislation. Selinger said Wednesday his government will allow anyone who wants to speak to the bill to have their say and it will not shut down debate.

"We always have provision for lots of space for people," Selinger told reporters.

"Usually everybody gets an opportunity to speak and I'm sure that will be the case this time."

The tax increase is the latest in a string of changes the government has made to the balanced budget law, formally called the Balanced Budget, Fiscal Management and Taxpayer Accountability Act.

In 2010, the government suspended the law so it could run deficits until 2014. It also softened the penalty cabinet ministers face for running consecutive deficits from a 40 per cent salary cut to 20 per cent.

Wednesday's bill would extend the deficit period and the softened penalty to 2016. Selinger announced the new timeline in the winter, citing a sluggish world economy.

The bill would also create another loophole to allow deficits. It contains a provision that would forgive any deficits caused by a drop in federal transfer payments or steep losses at the province's Crown corporations.

Cabinet ministers would not be penalized for deficits caused by a drop in total federal transfers below the current per-capita level of $2,623. They would also not be penalized if the combined profits at five Crown corporations fell "more than five per cent below the average net income of those agencies for the three immediately preceding fiscal years", the bill says.

The government has not yet announced dates for public hearings on the legislation.

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