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Talking Turkey on Tax Cuts

Author: Richard Truscott 1999/09/25
It's been a long road, but taxpayers may actually be starting to see a light at the end of the tunnel. In the current provincial election, each of the three main parties has unveiled proposals to cut taxes.

The Saskatchewan Party is offering to cut the provincial income tax rate by about 20% and reduce the income tax paid by the average family by $1,200 after four years. The Sask Party is also promising to cut the PST from 6% to 5% and put an average of $300 a year back into our pockets. Therefore, their plan would drop the average families total tax bill by $1,500 after four years. Their cuts to personal taxes would amount to about $847 million.

The NDP says it will drop the provincial income tax rate by about 16%. Under their proposal, the annual provincial income tax paid by the average Saskatchewan family of four earning $50,000 would be reduced by $1,000 after four years. Their total tax cut: $500 million.

Last, the Liberals are promising at least a 10% cut in provincial income tax worth $95 million after four years. They would also provide a maximum $200 of property tax relief for homeowners and $100 for renters each year. The Liberal tax cuts total $340 million.

But before you cast your ballot on September 16th, there are some things you should watch for.

Voters and taxpayers should be wary about claims by the current governing party that it has already cut taxes. But the true tax record of this government since 1991 has been one of tax hikes not tax cuts.

For instance, the NDP claim the cumulative impact of their tax cuts in recent years has been $1.2 billion. Much of this is cuts to taxes that the NDP government itself hiked in its first few budgets. But even if we allow them to claim the full value of the $1.2 billion in tax cuts since 1996, our research has identified almost $4 billion in tax hikes from 1992 to 1995. So for every dollar in tax cuts since 1996, there were more than 3 dollars in tax hikes in the early 1990s. That's one step forward, three steps back.

Some in this campaign will say they are taking a "balanced approach". But that is really just code for "fence-sitting" and doing as little as possible. Or they will say: "we will only cut taxes to the extent that we can afford them." We say its time to turn this equation right-side up: "Taxpayers support government spending to the extent they can afford to pay for it."

Where on the spending side of the equation would they reduce expenditures to ensure their tax cut promises are delivered Outside healthcare, education and highways there is still $3 billion in the province's $5.8 billion budget, much of it in non-priority areas that could be scrutinized.

To make sure they can provide real tax relief, each party should clarify exactly how their plan fits together. In other words, what will they commit to do to guarantee that their tax cuts will be implemented if they take the reins of power and form government

Yes, its encouraging to see the Liberals, NDP, and Sask Party start to talk turkey on tax cuts. But until the parties provide more detail about their tax cut proposals, it's just a lot of feathers but not much chicken.

A Note for our Readers:

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Franco Terrazzano
Federal Director at
Canadian Taxpayers
Federation

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