The majority of the headlines and subsequent coffee row
talk stimulated by the themes carried in the media re-garding
the provincial budget centred on two things:
the closure of STC and the expansion/increase to the PST.
Yes, those were important elements of the budget, but to lim-it
the discussion to those topics underestimates or ignores some
broader themes contained in the fiscal forecast designed to make
Saskatchewan more competitive.
That these aspects were overlooked in the mainstream media
coverage is not surprising. Most reporters are employees of a news
organization and generally see the world through the eyes of con-sumers,
so they focus on taxes on consumer spending as well as
the bus services. They didn’t, for example, spend much time on the
fact that the provincially owned rail car corporation is being wound
down and the assets sold off. This has little to no consumer interest,
so has little appeal to reporters.
The fact that the coverage was narrow, though, leaves a few other
topics worthy of further exploration.
Most notable is tax policy.
The shift to more consumption tax from income tax is monumen-tal
for investors. This idea is not new – Jack Vicq and his Tax Reform
Commission advanced similar recommendations more than a de-cade
ago under an NDP administration. His push was to encourage
investment, the principal driver that gave us the SaskaBoom, after
years of discouraging investment that forced people to look to other
provinces for opportunity.
We now have taken a critical step forward on that idea.
Further, the Kevin Doherty plan includes a reduction in both cor-porate
and personal tax rates over the next year or two, an addition-al
initiative best understood when put into a broader context.
For too many years, Saskatchewan played second fiddle to
Alberta where attitudes towards success and profit were different
and reflected in tax policy. Alberta had the lowest personal tax rates
in the country, attracting capital and investors, often the best and
brightest from this province.
The election of a new government in Alberta with a new approach
has opened the door for Saskatchewan to claim the space vacated
by our neighbour to the west. Brad Wall and Doherty have done just
that in their latest budget. Saskatchewan is poised to be one of the
low tax jurisdictions in the country in terms of capital and invest-ment
with this budget, opening an array of fresh opportunities.
One is called the address of convenience where taxpayers tempo-rarily
seek the low-cost jurisdiction. Imagine a Toronto-based entre-preneur
selling his or her business for $100 million. Their tax advisor
is no doubt going to recommend they relocate to a tax-friendlier
jurisdiction to execute the deal, thereby saving millions in taxes.
Alberta was always the choice, receiving millions in new tax mon-ey
and providing nothing in the way of health services or roads for
this person.
Alberta has given up that advantage. Saskatchewan is well on
its way to grabbing it. Some have likened the idea to being the
“Switzerland of Canada,” where capital and investors are attracted
by low taxes and a welcome mat.
Capital investment is a primary force in building an econo-my.
It’s focused on the balance sheet of a province, not the in-come
statement which tracks potentially unsteady revenues from
commodities.
When a balance sheet is strengthened, it tends to stay strong. We
don’t, after all, “unbuild” mines when they have been completed.
Capital is the fuel of an economy. The budget, while labelled in the
media as a tax and burn effort on the consumer front, is more than
that. It represents a structural change towards something stronger
over the longer term, an initiative that will improve our competi-tiveness,
slow the growth of public debt and attract more fuel for
our economy.
BY PAUL MARTIN
THE BOTTOM LINE
“The budget, while labelled
in the media as a tax and
burn effort on the consumer
front, is more than that.”
TOPAE, JASON WINTER/SHUTTERSTOCK.COM
The Switzerland of Canada
There’s more to the provincial budget than it seems
64 Think BIG | Quarter 2 2017 | saskheavy.ca
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