Manitoba's tariff relief measures welcomed by business community, brewery as good first step

Some in Manitoba's business community are welcoming early provincial initiatives to help cushion the economic fallout of U.S. tariffs on Canadian goods.

Premier Wab Kinew announced Tuesday businesses affected by the tariffs can choose to defer paying both the provincial sales tax and the provincial health and post-secondary levy — commonly called the payroll tax — for at least the next three months, starting with the February tax period.

"This is about them having liquidity, having that cash on hand, having those dollars to keep paying people's paycheques," Kinew said.

"As we go further, as different contours begin to reveal themselves in terms of the economic impact, we'll be there, as will the federal government to ensure that there's other supports for workers and businesses."

Winnipeg's Barn Hammer Brewing Co. plans to opt in to the provincial sales tax deferral, founder Tyler Birch told CBC News.

He said "everything helps" as the brewery's cash flow is already tight coming out of winter, and as they brace for potentially higher business costs and fewer customers as discretionary spending tightens up.

"Being able to keep some of that cash right now to soften the blow would be really great," Birch said.

He hopes the deferral period is longer and that payback to the province is gradual.

His business is already exempt from the payroll tax, which applies to larger companies with payrolls of more than $2.25 million annually. 

Chuck Davidson, president of the Manitoba Chambers of Commerce, said the measures are a good first step and indicate the province's recognition of the challenges ahead.

"The hope with all of this is that this is not a long-term situation," Davidson said.

He expects additional federal and provincial measures as the effects of tariffs become clearer and hopes they include more immediate options, including Ottawa helping to offset employee salaries or offering tariff rebates.

Davidson is also looking for progress on eliminating inter-provincial trade barriers.

Kinew said Ottawa and the provinces would have more to say on that on Wednesday.

Measures won't help all businesses, employees: tax expert

One financial and tax educator agrees allowing businesses to defer the payroll tax may be helpful to some, but won't provide relief to the majority.

Nearly 98 per cent of Manitoba businesses are considered small businesses, which have fewer than 100 employees on staff, the Manitoba Bureau of Statistics reported last June.

Evelyn Jacks, president of Knowledge Bureau, said the payroll tax deferral isn't an option to many small businesses, who are exempt from it.

"Having said that, any tax relief at this point in time that's going to keep people employed, whether in the public or in the private sector, is going to be important, because it will enhance cash flow," Jacks said.

"[It will] allow people to not make too many changes within their labour force and in fact, start using some of that extra cash flow to establish new opportunities."

This applies to the seven per cent provincial sales tax deferral option that businesses would still collect but submit to the province later, Jacks said.

"That will certainly help with cash flow planning in the short term, but it is likely not a good long-term strategy either for the…government or for the small business," she said.

"Thinking about, you know, longer-term tax incentives and opportunities may provide for better results."