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Another tax increase looms on the horizon

Manitoba is one step closer to another tax increase.

That’s what the recent announcement by Moody’s Investors Service boils down to.

For those not familiar with Moody’s, it’s a credit rating service that carefully looks at an organization’s finances and assigns a grade to show the amount of risk involved with loaning the organization money. Low grades mean an organization is risky and lenders should think twice about loaning them money, or at least should charge them higher interest rates to compensate for the risk.

Moody’s recently looked at the Selinger government’s finances and expressed concern by placing a “negative” outlook on the government’s credit rating. But even without the downgrade, Manitoba’s finance minister has noted the “negative” outlook designation will cost the province more in borrowing costs.

While the exact cost of borrowing has yet to be determined, it’s clear the taxpayer will be the one to foot the bill; likely through higher taxes.

The news is hardly shocking to the Canadian Taxpayers Federation. Long before the author of this column came on the scene, we had cautioned the provincial government that it was increasing spending too fast during the Gary Doer era. We noted that the government should spend more prudently, pay down more debt and put aside savings in case a flood or recession came along.

But they didn’t listen. From 2000-01 to 2011-12, the provincial government spent more than budgeted 11 times. They grew the bureaucracy by leaps and bounds and seemed to approve every “nice to have” project that came along.

From 1999 to 2014, Statistics Canada data shows no province saw a larger increase in government employment as a percentage of its total workforce. Nation-wide, the government currently employs 21 per cent of Canada’s workforce, yet in Manitoba it’s a whopping 27 per cent.

It was easier for the government to pay for all those extra mouths at the table during the good times. But now that growth has slowed, the government has had trouble paying the bill; hence the PST increase.

In terms of “nice to have” infrastructure projects, consider Winnipeg’s new stadium, new human rights museum, massive convention centre expansion, new arena, Assiniboine Park upgrades, new park at the floodway and Bird’s Hill upgrades to name a few. Many of the aforementioned projects were built with good intentions, but can we afford them all?

Again, see the Moody’s announcement.

Back in 2011, the Canadian Taxpayers Federation noted how spending had been increasing by five per cent annually, yet the provincial government suddenly promised to budget based on increases of just two per cent annually. The plan for restraint was positive, but just as a leopard can’t change its spots, the Selinger team didn’t suddenly turn into prudent fiscal managers.

Consider that the government’s 2012 budget projected a $23-million surplus by 2014. Meanwhile, we’re currently facing a $357-million deficit. They just couldn’t get spending under control.

If you’re not in the ‘mood’ for higher taxes, then get your friends and family to tell the Selinger government to get its spending under control. If that doesn’t happen, then brace for impact. We’re headed for another tax increase.

» Colin Craig is the Prairie Director for the Canadian Taxpayers Federation

Republished from the Brandon Sun print edition August 23, 2014

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Manitoba is one step closer to another tax increase.

That’s what the recent announcement by Moody’s Investors Service boils down to.

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Manitoba is one step closer to another tax increase.

That’s what the recent announcement by Moody’s Investors Service boils down to.

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