12/05/2013 05:55 EST | Updated 02/04/2014 05:59 EST

In effect since July, Manitoba tax hike is finally passed by legislature

WINNIPEG - Manitoba's NDP government got its controversial sales tax increase approved in the legislature Thursday night as the fall legislature sitting ended, but the fight appears to be far from over.

After months of stalling tactics by the Opposition Progressive Conservatives, the NDP majority pushed through a final vote on the government's budget bill introduced last spring.

Tory house leader Kelvin Goertzen called on New Democrat backbenchers to vote against the tax hike and live up to a 2011 election promise not to raise taxes, but he did not convince anyone.

"Can we find one MLA who will keep their word — just one?," Goertzen said in the chamber.

The bill makes official a tax hike that took effect in July, raising the levy from seven to eight per cent. The bill also suspends a section of the province's balanced budget law that requires a referendum for any increase to the sales tax.

Opposition Leader Brian Pallister used the last question period of the fall sitting to accuse the government of breaking the balanced budget law and ignoring Manitobans.

Finance Minister Jennifer Howard answered by saying the only option to a tax hike is a series of deep spending cuts.

"(Pallister) does not believe in a plan to invest in Manitoba's core infrastructure," Howard told the legislature Thursday.

"He would like us to make the choices to cut funding for health care, to layoff nurses, to cut funding for education."

Pallister has promised to fight the tax increase in court. Raising the tax without a referendum, and before changing the law that requires a referendum, is illegal, he said.

"What have we seen this session? We've seen a reaffirmation of a government that's willing to put itself above the law, and above the people of this province."

The tax hike has already cut into the NDP's popularity. The party that has been in government for 14 years, and has 37 of the 57 legislature seats, is now running behind the Tory opposition in recent opinion polls

Premier Greg Selinger said in the 2011 election campaign that he would not raise taxes, and dismissed a specific suggestion that a sales tax hike was looming as "nonsense."

With the next election slated for the spring of 2016, the battle lines that are already being drawn suggest the Tories will run on accusations the NDP has mismanaged the province's finances. The NDP have made it clear they will run on what they say is a record of funding key services and much-needed roadwork.

"These are investments in the core, critical infrastructure of Manitoba that, we have heard from economic leaders in the province, will make a tremendous difference," Howard said Thursday.

Howard said the government is still aiming to balance the budget by the 2016-17 fiscal year, as promised. That target has already been pushed back once, from an original target of 2014-15. Last year's deficit totalled $580 million — $120 million more than first budgeted.

But Howard indicated the balanced budget goal is not unconditional.

"That is a commitment that we all want to make happen, but at the same time, I will say that we are not going to balance the budget by making short-sighted decisions as was done in the past," Howard said, referring to spending cuts of the Tory government of the 1990s.

"So I'm not going to balance the budget by doing things that I think are foolish because they get short-term results and cause long-term pain."

The tax-hike bill was, along with dozens of others, supposed to be passed into law last June. The Tories stalled debate by calling for recorded votes, challenging rulings from the Speaker and other tactics.

The spring sitting dragged on through the summer. Eventually, the Tories agreed to let all bills go to a final vote by the end of the year, in exchange for a longer spring sitting next year and other concessions.

Among the other bills which received final approval Thursday:

— New loopholes in the balanced budget law to allow deficits when transfer payments or Crown corporation profits drop sharply.

— Higher fines for motorists who speed in construction zones.

— Loosened regulations on charter bus services, to allow for more competition.

The legislature is slated to resume March 6.