Step in the right direction, really long way to go

REGINA: The Canadian Taxpayers Federation (CTF) is applauding the Saskatchewan government's decision to reduce two provincial business taxes.

The province has announced that effective January 1, 2005, the small business corporate tax rate dropped from 5.5 per cent to 5 per cent. The corporate capital tax exemption was also raised from $17.5 million to $20 million.

"These tax cuts are a much-needed step in the right direction," said CTF Saskatchewan director David MacLean. "If this is a sign of things to come, it's encouraging news for over-taxed business and individuals in our province."

"Saskatchewan's tax rates are the biggest reason for our lack of economic development," said MacLean. "Saskatchewan job growth last year -- considered by many to be a good year -- was dead last among the provinces, and our ten-year average job growth is also dead last. It's clear the government needs to do more to make Saskatchewan a competitive place to live and do business."

Saskatchewan's tax disadvantage:

- The reductions for small businesses mean Saskatchewan is now tied with Manitoba, Nova Scotia and Newfoundland for the 4th lowest small business rate in Canada. New Brunswick's rate is 3 per cent, while Alberta's is a full point lower at 4 per cent.

- Saskatchewan's general corporate income tax rate is the highest in Canada, a full three percentage points higher than the Canadian provincial average.

- The corporate capital tax rate is second highest in Canada. British Columbia, Alberta, PEI and Newfoundland have no corporate capital tax at all. Saskatchewan's rate is twice that of Manitoba's. The capital tax on financial institutions is the third highest among the provinces.

"Saskatchewan needs more business and personal tax reductions in the upcoming budget if we're serious about economic development," said MacLean. "Saskatchewan compares unfavourably in every single tax category, and that means slower economic growth and fewer jobs for Saskatchewan residents. Let's hope the government is acknowledging the wisdom of reducing taxes to encourage job growth."