Wall hints at pullback on corporate tax rate cut

Premier Brad Wall is suggesting his Sask. Party government could pump the brakes on a planned reduction to the corporate income tax rate.

In March’s budget, it was announced Saskatchewan would see its corporate tax rate decrease from 12 per cent to 11 per cent by July 1, 2019.

A phased-in approach was taken to achieve that target, beginning with a 0.5-per-cent reduction to 11.5 per cent this past July.

Wall’s rationale for the reduction was to remain competitive with other provinces in attracting investment. His government argued shifting tax away from corporate income taxes and onto consumption tax (via a broader provincial sales tax) would encourage productivity.

But now Wall suggests there is less need to drop the corporate tax because of what has since taken place in other provinces.

Topping the list of post-budget developments is British Columbia’s new NDP government announcing plans to increase the general corporate tax rate in that province by one per cent (to 12 per cent) in 2018.

It remains unclear whether or not Wall wants to increase the corporate tax rate to 12 per cent, keep it at 11.5 per cent or do something else altogether, though his comments Thursday would suggest the government will keep the corporate tax where it is.

“I do think it’s reasonable that we would want to achieve that competitiveness to have a rate that’s as low as anywhere else in Western Canada,” Wall said.

By keeping the new, 11.5-percent tax in place, Saskatchewan corporations would still pay less than Manitoba (12 per cent) and Alberta (12 per cent).

It was back in 2012 when Wall’s “Saskatchewan Plan for Growth” first called for a 10-per-cent corporate tax rate by 2015, in part because it would create a tax structure capable of competing with neighbouring provinces.

Wall said Thursday there will likely be overall savings to the budget as a result of the impending changes to the tax structure, which could also consider changes to the small business tax rate.

The premier signalled small businesses, currently paying a reduced rate of two per cent on their first $500,000 of eligible income, could see a change — likely a tax reduction — to “provide a shot in the arm for that sector.”

Wall said doing so would signal to the country Saskatchewan has the best small business tax structure in Canada “and that’s also an advantage we would want to pursue to keep our economy strong.”

It’s reasonable that we would want to achieve that competitiveness to have a rate that’s as low as anywhere else in Western Canada.