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Inflation dropped thanks to gas tax, Manitoba premier says, but economists are wary

Inflation rates have dropped half a per cent nationally, and are the lowest in Manitoba at 0.8 per cent, according to Statistic Canada.

Statistics Canada said this is largely because of decreased gasoline prices. It even gave the province a bit of a shout-out, saying “lower gas prices in Manitoba contributed to the national decline, following a temporary suspension of the provincial gas tax.”

Premier Wab Kinew was all over this on Tuesday, when the numbers became available.

“Manitobans to this day continue to save 14 cents a litre off what the prices otherwise would be had we not taken this step. It’s direct help to Manitobans who have been struggling with inflation and struggling with higher costs,” Kinew said.

He didn’t confirm whether the tax slash would continue after June — when the temporary measure is set to end.

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Jesse Hajer, assistant professor in economics and labour studies at the University of Manitoba, said when the gas tax holiday lifts, so will inflation. “That’s something Manitobans will have to be prepared for when that gas tax goes back on. We’re going to see a big jump in inflation,” he said.

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The discount at the pumps also doesn’t impact those needing financial relief most, he said. “Those who can’t afford a car, who rely on public transit, their price level isn’t coming down this month. Transit fares are going to be the same price.

“The cost of gas tax, for example, could have easily paid for free transit for Manitobans,” Hajer said.

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One week ago, the Social Planning Council of Winnipeg (SPCW) also took shots at the tax break and said the money it used could have pulled 31 per cent of families above the poverty line.

Jesse Hajer with the University of Manitoba says there are more sustainable ways to reduce Manitobans’ living costs. “Having targeted credits and benefits help,” he said, citing transit fare reductions.

A recent report that the SPCW helped compile said government transfers — like the Canada Child Benefit — are also important poverty-reduction tools.

Kinew said he knows there’s still a long way to go.

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“We recognize the work is not done. Manitobans are still struggling with the cost of living, so we are going to keep taking steps to help,” he said, but did not name any specific measures.

Click to play video: 'Mixed feelings as Manitoba’s gas tax holiday begins'

Mixed feelings as Manitoba’s gas tax holiday begins

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