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The Folly of High Taxes

Author: Richard Truscott 2000/08/23
Tax relief and tax reform will help spur economic growth, which means more opportunities, and more and better jobs. It seems like common sense, doesn't it

Unfortunately, not everyone believes it is. For instance, you may remember that before the budget, the leaders of the Saskatchewan Government Employees Union (SGEU) used several thousand dollars worth of their members' dues to buy half-page newspaper ads attacking tax reform and tax relief proposals, in spite of the fact that the tax cuts would undoubtedly help their members, many of whom are middle-class taxpayers.

The provocative headline of the ads: "Do you want to be an Albertan " Presumably union leaders were trying to warn the people of Saskatchewan about adopting the barbaric low tax and pro-business policies of our western neighbours. (What a terrible place Alberta must be!)

The irony, of course, is that thousands of young people and hundreds of entrepreneurs continue to flee Saskatchewan in search of greater opportunities and lower taxes found in our sister province.

If we work at it, however, there is still time to turn the tide toward success, and turn the exodus of Saskatchewan people into a great return of people, businesses, and investment.

And contrary to the propaganda from defenders of the status quo, tax relief will also lead to better health care and education.

Because important government programs - the ones we value - need a strong economy to support them, not an economy weakened by high taxes, where lack of opportunity forces people into dependency on the state.

A couple of years ago a friend of mine drove his car to Mexico. He told me a story that illustrates my point about the folly of high taxes:

A few years ago the Mexican government decided to build a network of modern highways and pay for them with tolls. But the tolls are so ridiculously high that most Mexicans can't afford them, and drive on overcrowded, crumbling side roads, while the beautiful toll roads are empty.

Lowering tolls would increase traffic, increase toll revenues, and put the roads to good use. But instead the tolls are jacked-up to squeeze even more money out of the diminishing number of drivers.

Presumably tolls could increase until the toll charged to the last billionaire that can still afford to drive is enough to pay for the whole highway system.

In the same way, keeping taxes high in Saskatchewan discourages economic growth and depresses tax revenue. Some of the potential tax revenue goes to other provinces, as jobs, taxpayers, and businesses move away, or goes down the "side road" of the underground economy.

Pro-tax advocates would probably agree with Mexico's toll road operators that taxes must rise to replace the revenue lost when these taxpayers left the province. Just be careful not to be the last taxpayer in Saskatchewan when the tax deadline rolls around.

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Franco Terrazzano
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