Manitobans spend, on average, 18% of their income on food – one of the highest rates among provinces. On the other end of the spectrum, Manitobans has some of the lowest purchasing power in Canada. The affordability concern seems rather obvious when both those conditions are laid out. In an effort to combat food affordability, Manitoba’s provincial government is looking to do-away with PST charged on all food, in addition to pre-existing basic grocery exemptions. This would move purchases like cooked rotisserie chicken, pre-made sandwiches, quick-grab salads, and even cans of pop into the zero-rated supplies category. Some comments have gone so far as to suggest that long term implementation of this policy could increase healthy food consumption (a food security consideration beyond price) and could improve rates of food waste. The reality of these statements depends on what foods are purchased; increased spending on immediately consumed foods are more likely to be eaten in their entirety than bulk purchases of ingredients, but perhaps at the trade-off of health or quality. Posting this blog before the change comes into effect let alone is voted on provides very little insight into the success of the policy however, what we can comment on are the limitations to meaningful food affordability, and why this change is a good first step (though, hopefully not the only step).
Consider the term ‘affordability.’ When you use affordability as a political driver, you force the public’s attention to what they pay rather than why the product is priced the way it is. Reducing the cost paid on the final good does nothing to address the worsening cost of production in a variety of agriculture sectors. This was the primary critique when Québec announced this week a similar impending QST removal from grocery items; sales tax removal only scratches the surface of rising food prices. Generated revenue from tax schemes could be reinvested back into food supply chains to address some of the cost of production concerns, however that revenue is lost in these PST/QST changes. Between forgone income and transition costs, this policy is expected to cost the Manitoba government over $30 million in the first year alone.
Which businesses are applicable to this change is also a point of contention. The way the bill is written, which businesses can access the PST exemption varies and does not apply for businesses who list tobacco as one of their many products for sale. Doing so unintentionally excludes local quick service restaurants and certain small independent businesses who serve similar products as grocery stores, but with the guarantee that their business will be overlooked in favour of stores where the PST exemption applies. In a grocery landscape already unaccommodating of small, local, and independent businesses, creating additional barriers to their success is unhelpful. Thankfully, an expansion of the policy to include these businesses is being considered
