Fight by Manitoba politicians over bill process could delay promised tax cut on food

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WINNIPEG — Manitoba’s governing NDP and Opposition Progressive Conservatives are at odds over who will be to blame if a planned sales-tax cut on food is delayed beyond Canada Day.

The dispute centres on parliamentary protocols.

Experts appear to offer differing opinions. And the government is relying on a one-page legal analysis with a typo.

At play is the government’s plan to eliminate the provincial sales tax from more food items as of July 1, announced in the March budget.

Debate has erupted inside the chamber over whether a tax cut can take effect before the accompanying bill is passed into law.

“That’s what’s often done, but it’s a little bit constitutionally murky whether an announced measure that’s introduced into the legislative assembly but not yet passed, whether the executive branch should be collecting that yet,” said Bryan Schwartz, a law professor at the University of Manitoba.

Basic groceries including bread, meat, milk and produce are already tax-exempt. The government’s change would extend the exemption to prepared meals, snacks and soft drinks, saving an average family of four roughly $100 a year, government estimates say.

The government introduced an omnibus bill to enact the change, along with many other budget measures, on May 7. It has demanded the Opposition agree to let the bill go to a final vote before the legislature’s summer break begins June 1.

If the bill doesn’t pass by then, the tax cut would have to be delayed and the Tories would be to blame, the government has said.

The Tories, however, have said governments have the authority to enact tax changes before a required bill becomes law.

The Tories have raised the possibility of not allowing the budget bill to pass by summer, in hopes of pressuring the government to also provide income tax cuts that would save families more money. They have said the NDP could enact their food-tax cut as planned while also looking at further tax relief.

The Tories appear to have several precedents on their side. Previous Manitoba governments have raised fuel and tobacco taxes before the accompanying bills were passed.

In 2013, Manitoba’s sales tax was raised in July, and the accompanying bill was passed five months later.

Federally, the current Liberal government temporarily suspended its excise tax on fuel in April, before the accompanying bill was introduced in Parliament.

“The premier can reduce the ... tax if he wants to,” Tory Leader Obby Khan told reporters last week.

The government, however, produced a memorandum written this month by a lawyer in its legislative counsel division.

The memo says there’s parliamentary convention to support consumption tax increases before the accompanying bill is passed. Because if the bill is defeated, people can seek refunds.

A tax decrease, however, is different. If the bill is never passed into law, retailers have no way to retroactively collect the tax from consumers.

The six-paragraph memo initially contained a typographical error — the missing word “not” — resulting in some confusion. A request to interview the author was not granted.

The memo has been criticized by the Tories for not citing laws or precedents for its reasoning.

But Premier Wab Kinew has said its legal opinion is solid.

“The tax on your groceries will not go down unless this bill passes the house before the house rises this summer. So the (Progressive Conservatives) need to get out of the way and let the bill pass,” Kinew said last week.

The NDP used the legislative standoff in a fundraising email sent to supporters Friday asking for money to help the party fight Opposition “obstruction.”

Paul Thomas, professor emeritus of political science at the University of Manitoba, said there’s a “rushed” look to the government’s memo. Thomas stressed he’s not a lawyer but has seen many tax changes happen before bills are passed.

“There are so many precedents supporting backdating tax changes that it would require some novel precedent or court ruling to claim that a tax reduction could not be implemented before approval by the legislature,” Thomas said.

Schwartz said he couldn’t comment on the conclusion of the government’s memo but having a distinction between a tax increase and tax decrease seems reasonable.

Michael Lukyniuk, a former principal clerk for the House of Commons, wrote in the Canadian Parliamentary Review in 2011 that enacting tax changes before bills are passed isn’t supported by any statutory authority. He said it’s a long-standing convention commonly used in budgets.

The bill that enacts Manitoba’s planned tax cut is bound to pass by November at the latest, given the NDP government’s majority in the legislature.

Kinew has threatened to keep the legislature sitting into the summer, if need be, in order to pass the bill sooner.

Steve Lambert, The Canadian Press