The provincial government unveiled its $14.8 billion budget for 2013, which features what might be the biggest tax hike in recent history in Manitoba.

Under the budget, the provincial sales tax increases to eight per cent, up from the current seven per cent, effective July 1, 2013 for the next 10 years. The province also plans to avoid a referendum on the increase.

The province said the increase means an average household is expected to pay $25 more a month. The budget also includes some fee increases and some breaks for seniors and young families.

The property tax increase is expected to bring in $277.6 million every year. Of that, $100 million will be solely invested for flood mitigation projects. The rest will go towards fixing roads, highways, schools and health centres.

The province is facing a $567-million deficit, with flood battles in recent years having high costs.

Finance Minister Stan Struthers said the money from the PST increase is critically needed to fix roads and for flood protection.

"We're the type of government that looks for solutions and we think this is a good solution," said Struthers.

Struthers and Premier Greg Selinger said the province will introduce the legislation that will allow it to waive a referendum needed to raise the PST.

"We'll waive the requirement ... for a referendum," Struthers said. "We think we need to move very quickly. We can't afford to lose a construction season."

PC Party of Manitoba Leader Brian Pallister said the tax hike is unjustified and argues a referendum should be held.

Manitoba Liberal Leader Jon Gerrard also voiced concerns about the tax increase. 

"It's going to break the backs of those who can least afford it - the poor," said Gerrard.

Small business owner Donna Lagopoulos from Desart said the one per cent hike on the provincial sales tax will hurt many independent shops like hers in Osborne Village.

“I see a lot of businesses are going bankrupt and going under. (I) don’t see the government doing that. I see them hiking where they can,” she said.

The Retail Council of Canada said the tax hike will encourage more cross-border shopping and hurt the economy. The Canadian Federation of Independent Business said the government should look at cutting spending rather than increasing taxes for a second straight year.

Some tax breaks for families, seniors

Families with babies will get a tax break. The province will remove PST on baby items including strollers, car seats and diapers. That will save Manitoba families more than $3 million dollars a year, said the province.

The basic personal income tax exemption is being raised to $250. The spousal and dependent exemption rate is also being increased to $250.

Seniors are also getting a tax break. They’ll be exempt from paying the education portion of their property taxes. It will be fully implemented by 2015. It’s expected to cost the province $50 million.

Minimum wage and some user fees rising, tax credit for rental units

Minimum wage is also going up from $10.25 to $10.45 on Oct. 1, 2013.

Various user fees are going up, which includes a $5 increase on fishing licences.

Under the budget, cigarettes are going up $1 a pack, effective at 12 a.m. April 17.

That’s expected to bring in $17.2 million in revenue.

A new tax credit is being introduced to help stimulate the construction of new rental housing units.

Eligible projects include apartment complexes with five or more residential rental units. The maximum tax credit is set at $12,000 per unit. Complexes must have at least 10 per cent of the units set aside for affordable housing in order to qualify for the tax credit.

The expected savings for landlords are $4.4 million.

Budgets for 11 provincial departments will continue to stay frozen or be reduced.

Province says budget aims to protect against economic uncertainty

Struthers said all the budget measures are intended to protect Manitobans from an uncertain economic future and will help improve flood mitigation efforts and other infrastructure projects.

"We know major initiatives will be essential to protect homes, farms and communities," Struthers said. "Raising any tax, no matter how small, is not an easy decision, but this revenue will help protect Manitobans against flooding and uncertainty."

Struthers said the province aims to balance the books by 2016-2017.

- with reports from Jeff Keele, Karen Rocznik and files from The Canadian Press