WINNIPEG -- Manitoba's Progressive Conservative government included a long-promised provincial sales tax cut in its annual budget Thursday -- a move that could pave the way for a possible early election.

The government said it plans to cut the tax to seven per cent from eight per cent as of July 1, which will save the average household $350 a year.

"We think that Manitobans deserve a break and â€¦ this is something we committed to doing," said Finance Minister Scott Fielding.

"It was a major platform item that we had and so we're very proud of this."

The tax cut was a cornerstone of the Tory election campaign in 2016, three years after the former NDP government had raised it.

PC Leader Brian Pallister promised the cut would come before the next election scheduled for Oct. 6, 2020, and in recent months he hasn't ruled out calling an earlier vote.

The 2019-20 budget also reduces ambulance fees to a maximum of $250, down from $340.

It keeps a tight rein on spending increases, with hikes of less than one per cent in health and education operating costs and cuts to some infrastructure spending.

The government is predicting a deficit of $360 million, $161 million smaller than the deficit in the current fiscal year. Fielding said the government is on track to meet its promise to balance the budget by the end of a second term.

Manitoba's finances have been helped by successive years of major increases in federal transfer payments. This year will see transfers jump by more than $300 million, mostly in equalization payments designed to help poorer provinces offer services similar to richer ones.

The opposition parties have criticized the Tories' spending restraint, and have said the public has paid more for things such as public-housing rent and tuition.

Opposition NDP Leader Wab Kinew said last year he would not commit to supporting a tax cut until he read the budget.

The budget vote is expected in June.