WINNIPEG - Realtors, farm groups and book sellers are speaking out in protest after the Manitoba government recently announced it was reviewing the possibility of harmonizing the GST with the provincial sales tax.
The federal government is pushing the idea of having a harmonized sales tax across the country, but this isn't sitting well with groups whose products are currently exempt from the provincial tax but fear this will change with harmonization.
Mike Moore, president of the Manitoba Home Builders' Association, said neither Ontario nor British Columbia spent enough time consulting with affected people before announcing their intentions to move to a harmonized sales tax.
Both provinces will have an HST as of next July.
That will leave only Manitoba, Saskatchewan and Prince Edward Island as holdouts. Alberta doesn't have a provincial sales tax and Quebec has a harmonized tax that is administered by the Quebec government.
Finance Minister Greg Selinger revealed earlier this month his government is considering a single sales tax in Manitoba.
The new tax would be collected by Ottawa, saving the province millions each year in administration costs.
Businesses would see substantial savings from no longer having to collect and remit two different sales taxes. They would also be able to get rebates for PST paid on input costs and capital investments, similar to the rebates they already get on GST.
But by far the biggest hurdle to merging the two taxes is figuring out what to include and what to leave out. While basic groceries, medical supplies and prescription drugs are all sold without GST or PST applied, there are literally hundreds of goods and services in Manitoba to which only the GST applies.
Some, such as kids' clothing, books, and gym memberships, are exempted from PST for health and social reasons.
Others are exempted for economic purposes, like farm supplies such as barbed wire and bailing twine. But for most, the reason for the exemption isn't immediately clear, including lawn cutting services, snow clearing, and taxi fares.
Ontario and B.C. both decided to continue to exempt kids' clothes, diapers and books. B.C. will continue to exempt gasoline while Ontario will not. Both provinces will see consumers start paying provincial sales tax on bicycles, newspapers and real estate commissions.
Winnipeg real estate agent Lorne Weiss, chair of the political action committee of the Manitoba Real Estate Association, said adding PST to the fees paid when someone sells a home will add $700 to the cost of selling an average home in Winnipeg.
"The government has to start being a little careful," said Weiss. "If you keep attacking your golden goose, one day you're going to kill it."
Moore has already dropped off a package of information to Selinger advising him of the Home Builders' stance on the subject of an HST. It included information on what Moore's industry thinks Ontario and B.C. did wrong and what would work best in Manitoba.
"You can't make a decision which will please everybody, but if people feel they were listened to, that's huge," said Moore.
New homes are not exempt from GST -- although there is a new rebate home buyers can apply for on new homes under $450,000. If the seven per cent PST were suddenly added, the price of the average new home in Manitoba would rise by $13,600.
Both Ontario and B.C. took steps to offset the hit of an HST on new home sales by offering rebates or reductions in the provincial portion, depending on the selling price.
Moore wants to ensure Manitoba does the same thing. He also wants Manitoba to include offsets to charging PST on housing renovations.
Dave Angus, president of the Winnipeg Chamber of Commerce, fears the province will end up with a "dog's breakfast" of exemptions that would make harmonizing the two taxes less effective.
"We need to simplify it," said Angus. "There are far too many exemptions."
