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Manitoba Opposition Tories file lawsuit over provincial sales tax increase

WINNIPEG - Manitoba's Opposition Tories followed through Friday on a promised lawsuit against the NDP government's provincial sales tax increase.

The Progressive Conservatives filed documents that ask Court of Queen's Bench to rule the tax hike invalid because the government sidestepped a referendum, required under the province's balanced budget law, for any major tax increase.

An initial hearing is set for April 25.

"We want the hike reversed and we'd like the legislation that existed ... to be respected," Pallister said.

The tax increase was "an attack on the democratic rights" of Manitobans, he suggested.

The NDP government responded by saying it followed proper procedures.

"This is just another political stunt the PCs have been promising for months. Based on the advice of our counsel ... we are confident their case will not succeed," Finance Minister Jennifer Howard said in a written statement.

The issue erupted last April when the government announced in its budget it would raise the sales tax to eight per cent from seven as of July 1.

Under the balanced budget law, the sales tax could not be raised without a referendum being held. In fact, the law required a referendum before any bill to increase the tax could even be introduced in the legislature.

But the NDP introduced a bill that simultaneously raised the tax and suspended the referendum requirement. That, Pallister said, is the problem.

"They combined the two actions into one bill and we believe that was illegal."

A law professor at the University of Manitoba has said the province appears to have contravened the balanced budget law, but is likely to survive a court challenge because governments are usually free to rewrite their own rules.

Bryan Schwartz, who specializes in legislative process, said last year courts are generally loath to prevent a government from amending its own laws, unless there are constitutional or charter rights at play.

A similar controversy erupted in 2012 when the federal government stripped the Canadian Wheat Board of its monopoly over western wheat and barley sales without holding a plebiscite among grain producers. Opponents took the issue to court and argued the plebiscite had to be held first under the Canadian Wheat Board Act.

The Federal Court of Appeal rejected the argument. It ruled that a plebiscite was only required for some changes, but not the ending of the monopoly. But the court also said that even if a plebiscite were required, the government would probably be able to avoid holding one by changing the law as it sees fit.

The Tories have capitalized politically on the sales tax increase. They stalled it for months in the legislature and kept the issue front and centre in the public's minds. Opinion polls have suggested the NDP's popularity has plummeted since the tax hike took effect and is now well below that of the Tories.

Pallister has promised to roll back the tax increase if he wins the next election slated for the spring of 2016.

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