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Dizzy from the Budget Spin

Author: Richard Truscott 1999/03/29
It was enough to make your head spin. Within minutes of tabling the 1999 provincial budget, the government's "spin-doctors" were out in full force touting its merits.

Spending was up almost $400 million (including $195 million on health care), the debt was reduced by a mere $101 million to $11.4 billion, and the PST was cut by one-point from 7% to 6%.

The government would have us believe this year's budget is the best thing since sliced bread (except, of course, they are using our dough).

Certainly, any tax relief is welcome news. But there appears to be an enormous gap between the government's spin and the truth. Let's try to separate fact from fiction.

Spin: "Saskatchewan has the lowest sales tax rate in the country!"

Reality: Technically true, except Alberta has no sales tax at all. And taxpayers should keep the bigger picture in mind - the budget did little to deal with our overall tax burden. If you earn an income, we have the second highest income taxes in the country. If you drive a vehicle, we have one of the highest fuel taxes in the country. And if you own property in the city or on a farm, we have the highest property taxes anywhere in Canada.


Spin: "Since 1995, income taxes paid by the average Saskatchewan family have been reduced by over 10%, and that is in addition to the 33% reduction in sales tax."

Reality: Again, the government is playing fast and loose with the truth. The NDP government raised taxes by hundreds of millions of dollars from 1991 to 1995 in the first place, including hiking the sales tax from 7% to 9%. So for them to suddenly claim taxes have been reduced is a bit of a stretch. Also, bracket creep - by which inflation pushes taxpayers into higher income tax brackets - has quietly resulted in hundreds of millions in higher tax revenue over the past 8 years.


Spin: The PST cut will put $100 million a year back in the pockets of taxpayers.

Reality: Yes, but on the other hand, bracket creep increased provincial income tax revenues by almost $100 million this year alone.


Spin: The PST cut will stimulate consumer spending and help the economy.

Reality: Yes, it will be a small shot in the arm. But will the tax relief announced in the budget deal with the problem of brain drain and out-migration No. Will it make our tax system more competitive with our provincial neighbors No. Will taxpayers actually have more money in their pockets at the end of the day No. Higher payroll charges, rising utility taxes, and bracket creep will see to that.

In this budget, the government continues to whisper what we have been saying loud and clear for many years - the people of this province need and deserve meaningful tax relief. Lower taxes will stimulate growth, create more jobs and opportunities for our young people, and ultimately more taxpayers.

A large, diverse and growing tax base is the key to the long-term sustainability of our social programs.

With an election looming, the government may have wrapped its political brain around tax cuts, but their heart just isn't in it.

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Franco Terrazzano
Federal Director at
Canadian Taxpayers
Federation

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