On March 12, 2018, the Honourable Cameron Friesen, Minister of Finance, presented the 2018 Manitoba budget. This year’s budget, titled “Keeping our promises. Real Progress for Manitobans.”, included some significant tax measures, including increasing the Small Business Deduction from $450,000 to $500,000, and the introduction of a Child Care Centre Development Tax Credit.
In contrast to the 2017 budget, this year’s budget included several interesting commodity tax measures.
Commodity Tax Measures
Effective September 1, 2018, the Government of Manitoba will impose a carbon tax of $25 per tonne of greenhouse gas emissions on gas, liquid, and solid fuel products intended for combustion. This rate will remain in effect until a comprehensive carbon pricing and competitiveness review is performed in 2022. Specific tax rates by select fuel types will be:
- 5.32 cents per litre for gasoline;
- 6.71 cents per litre for diesel;
- 4.74 cents per cubic metre for natural gas; and
- 3.87 cents per litre for propane.
The government announced several exemptions to its carbon tax. First, fuel not combusted in Manitoba will not be subject to the carbon tax. In addition, agricultural process-related emissions will be exempted from the carbon tax, as well as all marked fuel, including marked gasoline and diesel. The province estimates that 90 per cent of marked fuels are consumed by the agricultural sector, but notes that exempting all purchases of these fuels will reduce administrative complexity.
Furthermore, until 2019, all entities to be included in an Output-Based Pricing System (OBPS) will receive an exemption from or refund of the carbon tax related to their emissions from fuels consumed on-site and process emissions. This exemption will apply to entities emitting at least 50,000 tonnes of greenhouse gas emissions per year, as well as smaller entities, which will be able to opt-in with government review and approval. The OBPS will be put into effect at a later date, once energy intensive and trade-exposed industries have been consulted.
The existing fuel tax system will be used to administer the carbon tax on transportation fuels and Manitoba Hydro will collect the carbon tax on natural gas. Additional administrative guidance on the application of the carbon tax will be released at a later date.
Retail Sales Tax
Effective May 1, 2018, retail sales tax exemptions will apply to drill bits specifically designed for oil and gas exploration or development and to fertilizer bins employed in farming operations. The government also announced that, although the current retail sales tax rate remains unchanged, it intends to reduce the rate to 7 per cent by 2020.
The tax rate for fine cut tobacco increased to 45 cents per gram from 28.5 cents per gram, effective at midnight on March 12, 2018. The tobacco tax rate remains unchanged on cigarettes, cigars and raw leaf tobacco.
Further information on Manitoba’s 2018 budget may be found on the province's web site at: Manitoba Budget 2018
If you have any questions about how these proposed changes might impact your organization, please do not hesitate to call the Ryan TaxDirectTM line at 1.800.667.1600.