Tax cuts pay for themselves
Author:
David Maclean
2003/04/08
Saskatchewan's Budget 2003 was a big disappointment because there is little indication the government understands the seriousness of the issues facing the province. To be perfectly blunt: the provincial economy is being suffocated by overwhelming tax burdens and an increasingly aggressive and meddlesome government bureaucracy.
Taxpayers subsidize the education of our best and brightest at public universities, and the students walk away in droves to more productive economies. This is natural human behaviour. People go where the opportunities are, and Saskatchewan university grads are leaving by the hundreds.
It has been born out time and again in jurisdictions like Ireland, Ontario and Alberta that lifting the weight of government off the economy sparks creativity and productivity. When pushing for tax cuts, the argument most often heard from 'big government' supporters is "how will you pay for these tax cuts "
For one thing, tax cuts aren't an expense for the people of Saskatchewan. To look at tax reform in this light is a mistake in the first place. Tax reductions leave peoples' money in their own pockets, and should be framed as saving money - not spending it.
What 'big government' people ignore is that tax reductions always pay for themselves. Virtually every government in Canada has reduced tax rates over the last decade, and every province has seen an increase in tax revenues. Tax cuts work.
The best example of this inverse relationship is Ontario, where income tax rates were reduced by 38 per cent since 1994. Over that time, the total tax take has increased by 39 per cent. New Brunswick slashed their personal income tax rate by 11 per cent, and saw a 30 per cent increase in tax revenues. Quebec reduced taxes by 7 per cent and revenues increased by a whopping 36 per cent.
Even in Saskatchewan, much-needed reductions in income taxes are resulting in increased revenues for the province. At last glance, income tax revenues are estimated to be $250 million higher than forecast. Unfortunately, those revenue increases aren't funneling back to taxpayers in further tax reductions, rather, they are being used to grow the government, as evidenced a five per cent spending hike in Budget 2003.
It's time our government realizes their lofty, interventionist policies are holding us back in Saskatchewan. The last 40 years clearly illustrates what isn't working - big government, high taxes, and a steadily creeping and meddling government bureaucracy.
Let's strike out in a new direction. Increase the basic personal exemption to $10,000 so that we are no longer taxing the poorest of the working poor. Let's work toward getting rid of onerous, awkward and complicated school taxes on property.
To realize a new future for Saskatchewan, spending cuts will have to be made. A new way of governing the province will be forged. But if other provinces' experience is to be our guide, we can take comfort in the knowledge that increased prosperity is within our grasp.