Sask. praised for low-income tax breaks

REGINA — A new reading of METRs gives good marks to Saskatchewan.

In a report released Wednesday, the C.D. Howe Institute says Saskatchewan’s METRs or marginal effective tax rate — the rate at which it taxes income that’s earned by people in the low- and middle-income ranges — is among the lowest in the country.

Comparatively speaking, that is.

Though this rate approaches 60 per cent in Saskatchewan and Alberta, the good news is this: at least it’s lower than in other provinces.

“The western provinces, for working families, they do a better job, Saskatchewan included, at limiting the incidence of very high METRs for families,” said Alexandre Laurin, who co-authored the report with Finn Poschmann.

Arcane, yes — but this has important implications for how governments help the middle class, and for families in which one member is considering re-entry to the workforce or working at a second job, says the institute.

The report says that making extra income “can be a double-edged sword” because as family income rises, that same family can lose amounts for child tax benefits, refunds on the goods and services tax and various other cash transfers and credits.

The report says the highest MET rate is in Quebec, where it approaches 90 per cent of earned income at some levels, and it’s little better in New Brunswick and Ontario.

“Many taxpayers at the low end of the income scale receive more government benefits than they pay in income tax — their average tax rate is negative,” says the report, which adds, “However, their marginal tax rate, the rate paid on an incremental dollar they earn, may be very high.”

Because so much money goes to government, the report says there’s an alternative for governments that want to help the middle class, like “universal in-kind programs such as community facilities and services aimed at neighbourhoods.”

“You do have a tax system where the marginal tax rate is pretty flat, especially in Saskatchewan,” Laurin said in a phone interview Wednesday.

“It’s pretty stable other than a little spike in the $45,000 to $50,000 range.”