The Canadian Taxpayers Federation (CTF) responded to the provincial government's musings of tax harmonization today by calling on the Doer government to guarantee the move would not become a cash grab. The CTF recommends reducing either the combined HST rate or providing income tax relief to Manitobans.

"There are benefits and drawbacks to harmonization, but the devil is in the details," said CTF Manitoba director Colin Craig. "While businesses will save on input costs and admin time, consumers will likely pay an additional 7 per cent in taxes on children's clothing, hair cuts, gasoline, veterinary services and other products and services. Any additional revenue the province receives through harmonization must be returned to Manitobans through tax relief."

Should harmonization proceed, the CTF recommends either reducing the combined HST rate or providing income tax relief to Manitobans. For example, the province could ensure the change is revenue neutral by reducing the combined rate to 11 per cent or 11.5 per cent instead of the suggested 12 per cent.  Alternatively, the province could cut personal income taxes.

"If the provincial government is going to take more by taxing additional products and services, then it should give an equal amount back through tax relief," concluded Craig.