Manitoba Gas Tax Holiday Begins

Evelyn Jacks

While Albertans are paying 9 cents more at the pumps after their gas tax was reintroduced after a two year pause from a 13 cent tax, Manitobans began to enjoy a 14 cents per litre gas tax holiday in January, which over 6 months will provide a household with 2 cars about $250 in savings and combined savings to individuals, business and municipalities are projected to be $163 Million.  That’s a nice boost into the economy which is projected to feature a 2% inflation rate.   But, will this filter down into consumer advantages at a retail level?  Possibly.

The Manitoba Government announced that these savings are primarily coming from tax reductions at the pumps so consumers will get immediate relief and of course, government fleets and some businesses may see a nice reprieve in direct cost savings – courier services, for example, truckers and other ground transportation services. 

But will consumers be treated to overall tax reductions from other businesses who benefit from the indirect reduction in costs of their inputs?  The cost of inputs have certainly risen because the carbon tax is present in many if not most of them, but there is a bigger issue that could prevent the passing down of indirect transportation cost savings in Manitoba.  

According to the CFIB, nearly 50% of all carbon tax revenues come from small businesses, who have very little access to grants or rebates (approximately 7% at this time).  The Federal Fuel Charge Proceeds Return Program – not yet created after first introducing its possibility in 2019 - was to deliver $2.5 billion collected in carbon taxes from taxpayers, to small businesses and Indigenous groups.  This has not happened.  A November survey by the Canadian Federation of Independent Business (CFIB) notes 85% of businesses now oppose the federal carbon tax and want it removed, which is a significant increase from the 52% opposition a year ago.

If the Manitoba Fuel Tax Holiday filters down to the small business community within these next six months, it could have an effect on prices paid by end user retail consumers in the province.  But Manitoba may need to prioritize negotiating with the federal government to do their part to pass along a rebate program to have any effect on pricing this summer.

Still due to other issues, small businesses may not be able to afford to reduce prices to consumers. Inflationary pressures are also coming from increased costs of labor due to wage hikes, the hike in premiums for the CPP and EI in 2024, and increased interest costs for business loans.  Many small businesses are facing the repayment of their CEBA loans and new interest costs on those loans if they could not repay.

So even if the provincial fuel tax reductions help, costs paid by end user consumers may still remain elevated for these reasons, and business owners may still continue to struggle in their post-pandemic recoveries. 

Bottom line is that economic recovery for business will certainly last longer than 6 months, and as unemployment rates are expected rise in 2024, it’s likely consumers – and businesses - will continue to be cautious with their spending.

Learn more about  new federal and provincial tax changes at the January CE Summits!