The recommendations of the Income Tax Review Committee are a big step in the right direction, but Saskatchewan needs to take a few more steps before we are truly on the path to lower taxes. Tax reform is important, but it won't mean much to taxpayers if their overall tax burden doesn't get lighter.

The Committee adopted several proposals that the Canadian Taxpayers Federation had recommended, including de-coupling from federal income tax rates by moving to a "tax on income" system; indexing taxes to inflation to end to the thievery of "bracket creep"; increasing basic family exemptions; and cutting the PST rate to 5%.

The Committee also identified what the CTF has been saying all along - that providing meaningful income tax relief is a priority for future growth and prosperity: "The Committee believes that a significantly larger personal income tax reduction is necessary to meet the challenges facing Saskatchewan." Hear! Hear!

The Committee is on the right track. Unfortunately, the train's not moving as much as the rhetoric might indicate. They recommend a $430 million cut in income taxes over four years that would be partially off-set by increasing PST revenue by $187 million, for a net reduction in taxes of about $240 million. The trick is to "expand the base" of the PST, so that more people are paying PST on more things, even though the rate is reduced to 5%.

The CTF recommended faster and deeper cuts, including a $400 million income tax cut over two years, paid for by reducing government spending in non-priority areas (outside of health, education and highways), or by selling some Crown assets to pay down debt and reduce interest costs. Of the $6 billion provincial budget, half is in priority areas and another billion is interest payments, which leaves about $2 billion in non-priority spending that could be rationalized and reduced. As for the PST, we support a reduction to 5%. But if the tax base is expanded, it should be done on a "revenue neutral basis" to make the PST fairer and simpler, not a bigger cash cow.

A more aggressive approach to tax reduction is definitely needed. Saskatchewan's "real" income tax rate is a lot higher than is generally known. Our basic income tax rate is 48%, third lowest in Canada. But when all of our taxes and surtaxes are applied, we have the second highest average tax rate, at 66.8%. Only Newfoundland is higher.

Our income taxes are also "punitively progressive", meaning that higher taxes kick in at lower income levels. The highest marginal tax rate is reached at the very low threshold of $62,392 in taxable income, only a few thousand dollars above the average national family income. Punitively progressive taxation drives many successful businesses and taxpayers out of the province; only 5,600 people in Saskatchewan have incomes above $100,000. Unfortunately, the Committee rejected the CTF proposal for a single tax rate, which would encourage (not punish) success, and is fair to low income earners because of larger basic exemptions.

The Income Tax Review Committee is to be congratulated for its efforts to reform our tax system. But taxpayers will be looking for an even stronger commitment to tax relief in the provincial budget. Without meaningful tax relief, tax reform is just a more efficient yoke on the taxpayer's shoulders.