Thank you for your kind introduction. It is pleasure to speak to you today.

As some of you may know, the Canadian Taxpayers Federation is a grassroots organization of concerned citizens who want make taxes low and reasonable and get government lean and accountable.

We have about 80,000 supporters across Canada, but the largest number is right here in Saskatchewan.

I would like to be able to take credit for those numbers, but I can't. The credit for the success of the Canadian Taxpayers Federation largely goes to four men whose actions encouraged the creation and growth of this organization to fight for the rights of ordinary taxpayers.

And who are these men, who have sold more CTF memberships than the rest of us combined? Their names are Chretien, Mulroney, Devine, and Romanow.

Because of them, the people of Saskatchewan bear one of the heaviest tax burdens in Canada.

Our high taxes kill jobs and businesses, erode family incomes, and make saving for the future impossible. They strip our poorest citizens of opportunity and send out best and brightest to live and work outside our province.

But we have an opportunity to change all of that.

There is growing evidence that tax cuts work. Lower taxes can stimulate growth, unearth the underground economy, create more jobs, and ultimately generate more revenues to dedicate toward debt reduction and social programs.

Our high tax burden is the most fundamental roadblocks to jobs, to prosperity, and to growth. It is up to all of us to put a stop to this taxpayer abuse once and for all.

The Tax Burden in Canada

There are a number of ways to measure and illustrate the extent of the tax burden in Canada.

(overhead #1)

Since 1961, the price of clothing has increased by 387%, the price of food by 414%, and the cost of shelter by 773%. But the average Canadian family's tax bill rose 1,286%!

In fact, the total tax bill now accounts for more of the average Canadian's personal budget than shelter, food, and clothing combined.

Part of the increase is due to the effects of inflation. But even calculating the change in terms of 1998 purchasing power, taxes went up by 139% over the period.

And having just finished filling out your income tax return, how do feel about the fact that we suffer under the highest personal income tax burden of any major industrialized country?

Our marginal tax rates (the rate of tax on the last dollar you earn) are also high. Most economists will tell you that marginal tax rates have the greatest impact on a person's decision about work.

(overhead #2)

Among G-7 countries, only Germany has higher marginal tax rates than Canada.

We also reach the highest marginal tax rate at a much lower income level than most other industrialized countries, at about $64,000 (Cdn.). In the U.S. a taxpayer only reaches the top marginal rate when their income reaches about $278,000 (U.S.).

On top of that, Canada also has one of the highest rates of capital gains tax. Most other countries don't have capital gains taxes, or have a much lower rate, and some provide full or partial indexation to offset the effects of inflation. Canadian are taxed on 75% of their capital gains regardless of inflation.

Contrary to what you hear from the government, the capital gains tax issue is not just of concern to high-income earners. In 1997, more than 800,000 Canadians registered some form of capital gains on their tax return, and nearly 60% of those taxpayers earned less than $50,000 a year.

It is a major source of income for retired Canadians - our seniors.

Business Taxes

As most of you will recognize, business taxes in Canada are relatively high. Our combined federal-provincial general corporate income tax rate averages about 43% - 4 points higher than U.S. rates, and 9 points higher than the G-7 average.

To make matters worse, Canada's business tax system is also complicated and dominated by "profit insensitive" taxes, such as capital taxes, property taxes, and payroll taxes – taxes that inhibit investment, discourage hiring, and raise compliance costs.

Businesses in Canada paid $19 billion in corporate income tax in 1995, AND over three times that amount in these profit insensitive taxes, for a total tax bill in the range of $84 billion.

The Tax Burden in Saskatchewan

We don't have to go all the way to Ottawa to see tax-happy politicians in action. We have a whole bunch right here is Saskatchewan.

(overhead #3)

Last year, the average family in this province paid about 50% of their income to various levels of government. To put it another way, every penny you earned up to July 2 went to government - one way or another. We call that day "Tax Freedom Day."

In contrast, our good neighbours in Manitoba get off the hook 10 days earlier, and in Alberta 19 days earlier. Saskatchewan taxpayers work almost three weeks longer than Albertans to satisfy the taxman.

Did you drive here today? We have the highest fuel taxes in the West.

Do you have an income? We have the second highest personal income taxes in Canada, after Quebec.

Do you own a house? We have the highest property taxes in the country.

(overhead #4)

Not only does Canada have the highest property tax burden in the industrialized world, but also within Canada, Saskatchewan has the heaviest property tax burden. I guess that makes us property tax champs of the world.

Relative to property value, on the residential side Saskatchewan is the worst at over $1,900 per $100,000 of property value. But our businesses are hit even harder. Saskatchewan is head and shoulders above the rest at over $4,600 per $100,000 of property value.

And now, here in Saskatoon, property taxes are going up by another 4.7%. (I'm sure you must all be very glad to hear about that.)

Property taxes are easily the most destructive, regressive, and complicated form of taxation.

The Hidden Tax – The Crown Utilities

Now here in Saskatchewan we don't just have regular taxes like the ones I've been talking about.

Our provincial politicians have been reluctant to raise income or sales taxes, which are highly visible. Instead, they use utility rates to tax us, charging rates well above the cost of producing and delivering the services and repaying debt.

As a result, the Crown utilities have made billions in excessive profits since 1991; profits far beyond what any private company operating in a normal environment with normal regulation would enjoy.

In fact, if the Royal Bank had made the same rate of return for its equity holders in 1998 that SaskEnergy has made for the Saskatchewan government, it would have made $15 billion in net income, instead of the $1.8 billion it did make.

Using the Crown utilities to raise funds for government is not only a very profitable form of taxation, it is also very regressive. High utility taxes fall most heavily on the poor and those people on fixed incomes. Unlike income taxes, there are no brackets and no "basic exemption" to keep the government from taking your last dollar. If you want to stay warm and keep the lights on, you have to pay.

The Myths about Tax Cuts

Just as a heavy tax burden is destructive, tax relief is constructive. It promotes productivity, economic expansion, and job growth. Leaving more money in the pockets of taxpayers boosts consumer spending, and increases the pool of investment capital that in turn creates more jobs.

Tax cuts increase the participation in the labour force and lower the overall wage cost for employers. Tax cuts also encourage new businesses and entrepreneurs and help unearth the underground economy. And lower taxes can actually increase government revenue over the long haul because economic growth is spurred.

There is historical and empirical proof to support each of these effects.

So why don't more governments cut taxes? Well, because of what I call "taxes, tall tales, and the truth."

There is the spin we hear in the budget speech, and then there's reality.

For example, politicians have told us:

By: Richard Truscott
Posted: April 27, 1999
Topic: Saskatchewan

Contact the regional director Colin Craig for further information.

Type: Related

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