SASK. PARTY PONDERS FIRST TAX HIKE
Wall addresses SARM
SASKATOON — The Saskatchewan Party government that has taken pride in lowering taxes is considering its first tax increase in next week’s budget.
In a spirited speech Wednesday to hundreds of delegates attending the 110th annual Saskatchewan Association of Rural Municipalities (SARM) convention, Wall characterized the drop in oil revenues as a “temporary” hurdle that will still require tough measures.
An increase in education property tax is “on the table” as the province struggles to deal with a revenue shortfall due to plummeting oil prices, he said.
Wall told reporters after the speech that a decline in oil-related revenues has left the government about $700 million short.
When his government took office in 2007, the cost of education was paid for mostly through education property tax, while general government revenues paid for the remaining 40 per cent, Wall told delegates.
His government set out to reverse that, and now, provincially, the province pays for two-thirds, he said. That could be clawed back in the budget as the government tries to make up for a shortfall in revenue.
“As we have a very difficult budget, we’re looking at the option of moving it back to the 40-60 goal we had,” Wall told reporters. “It would still be a dramatic reduction in education property tax over the situation we inherited in 2007.”
The Opposition NDP blasted the idea of a tax hike, saying the government has blown through billions of dollars since taking office in 2007.
“This government didn’t save a dime over a decade of resource wealth. Now, a short-term dip in oil prices has them scrambling to find more money,” deputy leader Trent Wotherspoon said in a statement.
Ray Morrison, board chair for Saskatoon Public Schools, said the split between provincial funding and property tax is closer to 50-50 in Saskatoon.
“That’s a bit of a surprise,” Morrison said of Wall’s remarks on Wednesday, adding the prospect of raising the education property tax has not been brought up by the province with the Saskatchewan School Boards Association.
“I just don’ t believe they’re going to touch the property tax,” SARM acting president Ray Orb said.
Scott Hennig, the acting prairie director for the Canadian Taxpayers Federation, said Saskatchewan has become one of the highestspending provinces per capita, fuelled in part by oil revenues.
“Our view is that they should hold the line on spending,” Hennig said. “Property taxes are one of the poorest forms of taxation.”
Hennig said the Sask. Party might be considering a property tax hike over raising the provincial sales tax (PST), for example, because it is the “least visible.”
He pointed out Saskatoon taxpayers have already endured municipal property tax increases of more than seven per cent and five per cent in the last two years.
Education accounted for slightly more than 42 per cent of Saskatoon’s total property tax bill in 2014.
Wall also repeated that the revenue-sharing formula that delivers 20 per cent of provincial sales tax revenue to urban and rural municipalities could be reconsidered in the budget. SARM members on Tuesday supported a resolution urging the government to keep its revenue sharing formula in place for the next two years.
Wall later told reporters he is loath to slash municipal revenues, which he called a “last resort.”
“Maybe we work hard to not change revenue sharing so that municipalities are not forced to raise taxes or withdraw from infrastructure investment,” he said.
Despite the challenges, Wall said it’s vital to keep building and addressing the province’s infrastructure deficit.
He criticized previous provincial governments that raised taxes and put off infrastructure repair when tough economic times hit.
“We think it’s important to continue to build,” Wall said. “We’re still dealing with the infrastructure deficit that came from that kind of decision making.”
Wall added the budget will include new “revenue neutral” tax incentives for those who create new manufacturing, processing or corporate office jobs.