EN FR

Cut in School Taxes Can't Wait Another Year

Author: Richard Truscott 2001/03/05
The Canadian Taxpayers Federation (CTF) recently presented a petition with the names of 12,500 taxpayers to Premier Lorne Calvert demanding a decrease in school property taxes in this year's budget.

School taxes have increased by more than 70% across the province since 1985, and have doubled in rural areas while farm income has plummeted. Local governments often get the blame for high property taxes, even though for years the provincial government has been off-loading onto local governments and local taxpayers. With this latest petition the chickens have come home to roost.

Our proposal is to reduce the school portion of property taxes by 40% over two years, which would cost about $240 million a year when fully implemented. To fund this cut, we have recommended opening up the Crowns to new forms of ownership, including private sector partners and shareholders, and using the proceeds to reduce the debt. The money that would have gone to interest payments would instead go to the schools and support the school tax reduction. In other words, sell some of the Crowns to save the schools.

That won't pay for the whole tax reduction, so we also need to prioritize government spending to make up the difference. Overall government spending has climbed by about $860 million from three years ago, and even small reductions in discretionary spending would help.

Government opponents of tax cuts have thrown a lot of red herrings in the path of this proposal. Education Minister Jim Melenchuk responded to the petition by saying that the CTF wanted a 40% cut in all property taxes, which would cost about twice as much. But that is not what we proposed.

Finance Minister Eric Cline said selling the crowns would only result in $180 million in interest savings, not enough to pay for the tax cuts. No doubt the government will also have to find other savings to make these cuts, as already pointed out. But since the province owns about $7 billion in crown corporation assets, perhaps Cline is being too conservative in his estimation of what could be gained if some of the Crowns were sold. New shareholders and private partners will also pay taxes which the government Crowns don't do.

So are all the red herrings in the net, or did some get away Property taxes are the most complicated and confusing taxes that we have, and it is perhaps inevitable that proposals to change them will be misrepresented or misunderstood. But what needs to be understood very clearly by this government is the plight of many taxpayers, particularly in rural areas.

If we want to keep farmers on the land, if we want to cut the fixed costs for struggling entrepreneurs and encourage wealth creation and job growth, then we need to lower school taxes. At the same time, if we want to build the future of Saskatchewan, we need to make sure our schools are adequately funded - not strangled by tax revolts fuelled by desperation, not starved by bad spending priorities, and not left to wither because of an outdated attachment to government-owned corporations. It's time for choices to be made.

For months the CTF has been calling on the province to launch a comprehensive review of property taxes similar to the recent examination of the province's income tax system. We need to look at the way property and school taxes are calculated to make the system fairer and more sensitive to income. But the province has stalled for so long that taxpayers can't wait. The future of many Saskatchewan people depends on meaningful action in the upcoming budget.

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Franco Terrazzano
Federal Director at
Canadian Taxpayers
Federation

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