Friday, June 26, 2009

10 per cent tax for Sask?

Enterprise Saskatchewan has recommended that the "Land of Living Skies" phase in a 10% flat tax for personal and corporate income. This would be a fantastic idea. We have advocated a single rate of 11% for years with a higher basic personal exemption. The exemption was raised by $4,000 last year, and now a single rate tax could be on the way.

The report can be read here. The section on "Tax competitiveness" begins on page 9. This excerpt makes the case well:

Rather than increasing revenue to the Province, high taxation can drive revenue away. This is already evident when comparing the high end of personal income tax in Saskatchewan (15%) with that of Alberta (10%); the 5% discrepancy has motivated some high-income earners in the province to find ways to divert their income into our neighbouring province.

It also discourages top income earners in all disciplines from moving into Saskatchewan. Saskatchewan’s marginal personal tax rates on labour income and savings, especially for individuals with modest incomes, are high. There is sound evidence to show high marginal tax rates deter people from investing in education, discourage savings and negatively impact on an individual’s decision to become a self-employed entrepreneur. High taxes also act as a deterrent to reporting income.

Ironically, lowering personal income taxes (PIT) could in fact lead to increased overall tax revenue.

1 comment:

Steve Cameron said...

Sure, they make their case rather well... except for the part where they actually *make* their case. Where are their sources? What is the evidence for these assertions? What are the drawbacks and who is effected most by these drawbacks? This reads more like a conservative wet dream than an actual analysis. Fail.

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