Saskatoon StarPhoenix
The Saskatchewan Party‘s promise to reduce provincial income taxes to help with affordability issues by raising the personal income tax exemption by $500 for the spousal exemption, child exemption and seniors’ supplement is being met with mixed reviews.
The party said 54,000 people will no longer pay any provincial income tax when the new policy is fully implemented.
The proposal has been met with positive reviews by the Canadian Taxpayers Federation (CTF), which said it would help make Saskatchewan more competitive with other jurisdictions.
“Saskatchewanians need tax relief and this income tax cut will make a real difference for family budgets,” CTF Prairie director Gage Haubrich said in a release.
He said tax cuts such as the one proposed by the incoming provincial government will be helpful in growing Saskatchewan’s economy while putting more money in people’s pockets.
But Erin Weir, a freelance economist who previously served as an NDP member of Parliament, said he does not think the proposed tax cut will have a major economic impact since it is not a full exemption and will not put $500 directly into people’s pockets.
“The tax credit is applied at the lowest provincial rate of 10.5 per cent, so $500 times 10.5 per cent is $52.50, which is certainly not a life-changing amount of money for most people in a year,” he said.
Weir said Saskatchewan is in a unique position compared to many other provinces when it comes to helping people with challenges around affordability because it can exert more control over the cost of utilities due to them being publicly owned, so some sort of policy to bring down those costs would be helpful for people.
There are also other avenues that might be more effective than reducing taxes when it comes to putting money in people’s pockets, Weir said.
“If the goal is to provide money to people, that can be done through rebates or grants; it doesn’t necessarily have to be done through the tax system,” he said.
Simon Enoch, director of the Saskatchewan office of the Canadian Centre for Policy Alternatives (CCPA), said the proposed income tax cut is in line with how the Sask. Party has governed since coming to power.
“That’s been the Sask. Party’s antipoverty program since 2007: don’t tax people who don’t make much money,” he said.
Overall, Enoch said tax cuts have not historically provided as much economic stimulus as larger public spending initiatives.
He said provincial income taxes are a large part of the province’s revenues and the incoming government’s tax reduction pledge is expected to cost more than $300 million over four years.
Enoch said he believes that cost has not been properly considered. He said with these tax reductions factored in, the incoming government is not expecting the budget to return to balance until 2027-28, which adds additional costs since the province will be operating in deficit for longer.
“These tax cuts are being financed by borrowing,” he said.
mhansen@postmedia.com
