Manitoba government to reinstate fuel tax, but at a reduced rate

WINNIPEG — The Manitoba government is ending its yearlong fuel tax holiday but bringing back the levy at a lower rate.

The government temporarily suspended the 14-cents-a-litre tax on gasoline and diesel at the beginning of 2024 as a way to help people deal with the rising cost of living.

The tax will be back in place on New Year’s Day at a rate of 12.5 cents per litre — roughly 10 per cent lower, the NDP government announced Monday.

Lower tax rates on other fuels, including propane and marked fuel used in agriculture, are also being reinstated at a 10 per cent lower rate.

The tax holiday caused Manitoba’s inflation rate to be among the lowest in the country, but it was criticized by some as favouring people who drive large, expensive vehicles.

The Canadian Centre for Policy Alternatives, a think tank, said the tax cut did nothing to help low-income earners who don’t drive cars and deprived the provincial treasury of more than $300 million a year at a time when the province is running consecutive deficits.

Premier Wab Kinew said the cost of living has hurt everyone and even people who earn six-figure incomes need relief.

“There’s a lot of people in Manitoba who earn six figures, because they work two jobs and they work long, long hours,” Kinew said in a year-end interview last week.

“I think of folks who are putting their name on the side of a truck, and it’s a beaten-up truck at that. And yeah, if you look at income level, they might seem like a high-income earner. But they’re working really, really hard.

“They’re contributing to the economy and to our community. And so if we can give people like that a break, to me that’s part of a progressive approach to governing.”

Kinew had said the lower fuel tax would cut grocery prices, and he threatened to take action against grocers if the savings were not passed along to consumers. Grocery organizations immediately responded that fuel taxes within Manitoba are a small portion of their overall costs.

Figures from Statistics Canada show Manitoba’s inflation rate for fuel was the lowest among provinces compared with a year earlier. But Manitoba also saw the steepest inflation on food over the same period.

Andrew Barclay, an economist with Statistics Canada, said earlier this year that Manitoba’s food inflation was being driven in part by high beef prices that resulted from drought and reduced stock.

This report by The Canadian Press was first published Dec. 23, 2024.

Steve Lambert, The Canadian Press