Government backs off promise to lower corporate tax rate
Mere months after lowering the corporate tax rate, the Sask. Party has announced it will be bumped up back to 12 per cent.
A tax cut was included in the most recent budget to bring Saskatchewan in line with B.C. as the province with the lowest corporate tax rate.
With B.C. increasing their rate to 12 per cent, Saskatchewan will be doing the same. The move was announced in Wednesday’s throne speech.
Instead, the Sask. Party will be raising the small business income threshold to $600,000, the highest in the nation. That is the point where a business reverts from the two per cent small business tax rate to the higher corporate rate, explained Canadian Taxpayers Federation prairie director Todd MacKay.
“This is important because it gives small businesses more rom to grow before they hit that higher tax rate. That’s a good thing. We want small businesses growing into medium and even big businesses, because that brings more jobs to our communities,” he said.
“It’s going to encourage growth among entrepreneurs.”
What MacKay was not pleased with was the plan to back off the promised corporate tax rate reduction.
“It’s a real missed opportunity,” he said.
“You don’t want to bust be as good as the other guys, you want to be better. When you give that kind of tax relief to entrepreneurs, they invest in their businesses. They create more jobs, which is good for communities and good for government too.”
The opposition NDP neither prised nor criticized the move. Instead, they focused on the unpopular decision to add PST to insurance.
“(Lowering corporate taxes) was a strange decision to make during a budget that saw increased taxes for families … and made pretty serious cuts to services people like and rely on like education,” said interim leader Nicole Sarauer.
“But if the premier wants to support small businesses, he should look at the changes they made through expansions to PST.”
Some of the Sask. Party leadership candidates have vowed to repeal the PST on insurance should they be elected.
The promise to back off that change is welcomed by MacKay.
“Putting the PST on insurance needs to change,” he said.
“A tax on responsibility is an irresponsible tax.”
MacKay said insurance can help mitigate some risks business owners take when they invest in other opportunities, but taxing insurance might discourage people from purchasing it.
“If insurance is the right tool to mitigate risks, punishing people for making sure they’ve got the tools in place to get through a tough time is bad government policy,” he said.
“It’s bad on a lot of levels.
“The government needs to turn around and take the PST off insurance premiums and they need to do it as soon as possible.”
The Saskatchewawn Legislature.