Met today with the Saskatchewan business tax review committee. Here are our recommendations and some excerpts from my comments this morning.
- Phase out the corporate capital tax
- Eliminate the PST on business inputs
- Reduce the corporate income tax rate to 11.5 per cent and eliminate the 10 per cent M&P rate
"The Canadian Taxpayers Federation (CTF) is a federally incorporated, non-profit and non-partisan, advocacy organization dedicated to lower taxes, less waste and accountable government.
The goal of the Canadian Taxpayers Federation recommendations in this submission is to reduce the burden of taxation on Saskatchewan productivity in order to increase employment, grow the economy and enhance the lives of Saskatchewan families.
The reality in Saskatchewan, which requires no quantification in this submission, is that our economy has underperformed for decades.
Our average GDP growth from 1994 to 2004 ranks dead last among the provinces.
The obvious question that arises when proposing lower tax rates is how the province can “afford” to reduce revenues while striving for a balanced budget. The CTF strongly advocates for balanced budgets and legislated debt reduction plans.
The point that needs to be accepted by government is that the province cannot afford inaction. Dramatic changes are required to foster the growth we need to ensure long term sustainability.
In order to best estimate the overall impact on government revenues we should look to British Columbia, the province that most recently under took such reforms. The 2001 British Columbia budget reduced dividend tax credits, reduced the corporate income tax rate from 16.5 per cent to 13.5 per cent, began phasing out the corporate capital tax and cut personal income taxes by 25 per cent.
In the first year after the tax cuts British Columbia government revenues declined by 1.3 per cent, and then rose steadily in the subsequent years. Since 2002/03 total government revenues have increased by 18 per cent.
When undertaking the required changes, the government must reaffirm it’s commitment to fiscal responsibility. Government must prioritize and reduce expenditures to make these changes a reality. "