The Canadian Taxpayers Federation (CTF) released a Department of Finance document today (obtained through Freedom of Information), which suggests the government didn’t follow proper legal procedures before raising the sales tax.
Unnecessarily blacked out info suggests government may have considered increasing PST higher than eight per cent.
In a Feb. 4, 2013 briefing note on raising the PST, the Manitoba government’s Director of Taxation advised the province must first pass legislation: “The referendum must be held, or the notwithstanding clause enacted, before a rate increase could take effect.”
This of course, has not yet happened. Bill 20, the legislation that waives the referendum requirement, (referred to as the
“notwithstanding clause”) is the same bill that raises the PST and it has not yet passed.
“The government’s Director of Taxation advised how to legally raise the sales tax and the government didn’t follow those steps,” said CTF Prairie Director Colin Craig. “Based on the government’s own staff advice, it looks like Manitobans are illegally being forced to pay a higher sales illegally.”
Specifically, Finance staff advised back on Feb. 4, 2013:
“An increased sales tax rate would require either a referendum under The Balanced Budget Act or a notwithstanding clause overriding the referendum requirement, which would require committee hearings into the amendment. The referendum must be held, or the notwithstanding clause enacted, before a rate increase could take effect. A
notwithstanding clause enacted during the normal legislative agenda could receive royal assent as early as June of 2013 as part of the Budget Implementation and Tax Statutes Amendment Act (BITSA), which means the rate increase could take effect July 1…”
“Taxpayers deserve to get their money back for every cent of illegal tax collected since July 1st,” continued Craig.
Further, the government blacked out material in its February briefing note that indicated what tax change they were considering, but didn't do the same in a subsequent note which indicates what actually happened.
“It seems like the government may have been considering a higher sales tax than eight per cent,” added Craig. “The government should release a non-blacked out version of the document immediately.”
The CTF is calling on the government to immediately reverse the sales tax increase, refund the money and cut wasteful spending instead.