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Low taxes are nothing to brag about

April 12, 2019

2-minute read

The Scott Moe government boasts that Saskatchewan’s a low-tax province. It shouldn’t. Taxes serve important objectives, and our leaders need to understand that. On March 20, the Saskatchewan government tabled its 2019-20 provincial budget, projecting a balanced budget for the upcoming year. In many ways that’s quite remarkable, with Saskatchewan’s economy heavily dependent on the price of oil. But budgets are about choices, and a modest tax increase could have accomplished much. In her budget speech, Finance Minister Donna Harpauer noted: “Our province has among the lowest personal and business taxes in the country, and there are no tax increases and no new taxes in this budget.” What she didn’t note is that taxes serve multiple aims and are an important aspect of shared prosperity. First, taxes can help finance important social spending, such as poverty in First Nations’ communities, affordable housing and child care. The province’s on-reserve rate of child poverty is nearly 70 per cent, second highest in the country after Manitoba. Further, more than 50,000 households in the province are in core housing need, meaning they’re forced to either pay more than 30 per cent of their income on shelter, live in housing requiring major repairs or live in housing with too few bedrooms. That’s more than 13 per cent of all Saskatchewan households — for Indigenous peoples, the rate is nearly double. In Regina, it costs about $845 per month for family to keep an infant child in child care. In Saskatoon, it costs about $900 per month. These high fees prevent many households from keeping their children in high-quality child care, which in turn keeps some parents out of the labour force. Second, taxes share the wealth, making a province more equitable. Increasing personal income tax rates can be especially effective at reducing income inequality. Yet, Saskatchewan’s top marginal tax rate is the lowest among all Canadian provinces, meaning its personal income taxes are the least effective in Canada at redistributing income. Third, taxes can discourage undesirable behaviour, such as excessive consumption of energy, alcohol consumption and cigarette smoking. France tripled cigarette prices by raising taxes every year between 1990 and 2005. During this time, cigarette consumption in that country was cut in half. Finally, taxes can reduce public debt. Saskatchewan’s public debt-to-GDP ratio currently sits at 25.8 per cent and is expected to hit 27.6 per cent by 2023. And where do Saskatchewan taxes as a whole currently stand in comparison with other provinces? A recent report found Saskatchewan to have Canada’s lowest tax rate as a percentage of GDP, at just 27.1 per cent. Meanwhile, Quebec’s stood at 37.3 per cent. And therein lies thick irony: Premier Moe attributes Quebec’s more generous social programs to equalization, rather than to higher tax rates. This should all make us all pause for thought. Do we want to pay low taxes if it means more poverty in First Nations’ communities, more homelessness and insufficient child care? For most residents of Saskatchewan, I think the answer is no. Politicians have a responsibility to facilitate a democratic dialogue that presents an honest set of choices. And that includes an honest conversation about taxes.
Nick Falvo is a Calgary-based research consultant, a research associate at the Carleton University Centre for Community Innovation, and a CCPA research associate. This column first appeared in the Regina Leader-Post on April 11.

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