Positive reinforcement is a wonderful thing, so let’s start off by giving a thumbs-up to Finance Minister Ken Krawetz for a few goodies in his budget plan.

First, he did something that sounds really geeky, but it will save virtually everyone in the province a good chunk of change.

He increased something known as the “basic personal exemption” by $1,000. In plain English, you were supposed to be able to earn $13,535 this year before starting to pay the lowest provincial income tax rate (11 per cent). But thanks to Minister Krawetz’s budget, you’ll be able to earn $14,535 before paying provincial income taxes.

The extra $1,000 of tax free income will save you $110. As the spousal exemption is also going up, if you earn $29,070 or more and have a spouse who is a dependent, you’ll be able to save $220.

But wait, it gets better. Have a kid or two to claim as dependents? The child benefit went up by $500, so you’ll be able to save another $55 for every child under your care.

In our pre-budget meeting with the Minister, the Canadian Taxpayers Federation recommended increasing the basic personal exemption to $15,000 by 2013. Thus, you can see why we’re so pleased to see such a large jump in just one year.

Moving along to the small business income tax rate, the government has committed to chop the rate from 4.5 per cent down to 2 per cent as of July 1, 2011. That’s expected to save small businesses an estimated $80 million annually.

It will also help grow the economy. Ask just about any small business owner and they will tell you how they usually put any tax savings towards buying new equipment, hiring employees and other ways to grow their company.

Another goodie that just about everyone can applaud is the government’s continued push towards reducing school taxes. This year they’ll be down about $55.6 million in total; $31.3 million lower for farmers, $5.6 million lower for commercial properties and $18.7 million lower for residential properties.

If that wasn’t good enough, the province has not only tabled a balanced budget, they will pay down the debt by $325 million.

All in all, you can see why it’s a good news budget.

However, that doesn’t mean it isn’t without faults.

First of all, there’s no long term plan for debt retirement. Paying off Saskatchewan’s $4.1 billion debt in $325 million chunks means it’s going to take a dozen years to do so. While Saskatchewan may be the only province to run a balanced budget and repay debt this year, when times are good debt repayment needs to be a higher priority.

Second, spending is expected to increase by 5.5 per cent this year. Since 2006-07, the Wall government has increased spending by 39 per cent in just five budgets.

That’s simply not a sustainable approach to spending. There’s no question Saskatchewan is growing and needs infrastructure upgrades, but so did Alberta. The only problem was the Alberta government couldn’t turn off the spending taps when revenues dried up. As a result they’re now battling huge deficits. Saskatchewan should exercise more prudent spending to avoid making the same mistake.

All things considered, it’s a good budget. More focus on spending restraint and debt repayment would make it an even better one.

By: Colin Craig
Posted: March 24, 2011
Topic: Saskatchewan

Contact the regional director Colin Craig for further information.

Type: Commentary

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