Manitoba says pandemic-induced deficit may not be as bad as feared

WINNIPEG — Manitoba Premier Brian Pallister says he may not fulfil a promise to cut the provincial sales tax next year due to the fiscal fallout from COVID-19.

Pallister originally promised to cut the tax to six per cent from seven by this summer and introduce a provincial carbon tax at the same time. But when the pandemic started, he pushed the plan back to 2021.

With economic uncertainty continuing, Pallister said Tuesday the tax change may be off the table.

"I wouldn't want to commit to that at this point in time. I think that there's just too many plus-minuses right now with respect to COVID to do that," Pallister said.

"That's actually one of many topics we'll be addressing ... what is the best way to re-enliven our economic progress? Is it lowering the (sales tax). Is it other investments?"

The Progressive Conservative government released updated budget figures Tuesday that showed another wide swing in Manitoba's finances.

In early March, the government forecast a $220-million deficit. Three weeks later, as COVID-19 numbers grew across Canada, the government warned the deficit could reach $5 billion.

The fiscal update said a more likely scenario is a deficit of $2.9 billion based on new economic projections from banks and other institutions.

The improved estimate is also based on Manitoba's low COVID-19 numbers, which have allowed the government to let most businesses reopen. There have been 325 cases in the province since the pandemic began. Seven people have died and 18 cases remained active as of Tuesday.

"Manitobans have been willing to set aside hard-fought-for rights and live differently to protect themselves and protect others," Pallister said.

Still, he said, the deficit could reach $5 billion if COVID-19 numbers rise and businesses are forced once again to close their doors.

The updated budget figures estimate the provincial economy will drop by five per cent this year, resulting in $1.5 billion less in government taxes and other revenues.

The figures also estimate the province will spend $2.1 billion on pandemic-related programs — everything from protective equipment for health-care workers to a $200 tax credit for seniors that was announced last month.

The Opposition New Democrats said Pallister has hurt the economy by not offering enough help to small businesses during the pandemic.

"Our economy is headed for a relapse because we know that there's still small businesses struggling and there's still so many people out of work," NDP Leader Wab Kinew said.

This report by The Canadian Press was first published June 30, 2020

Steve Lambert, The Canadian Press

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