The provincial budget estimated a $273 million deficit in revenues over the 12 months ending March 31, 2025.
The question [I propose], not asked by the NDP opposition, should be: is this deficit necessary?
Or is the deficit smaller than the current year a way to make the government treasury look empty?
No tax increases or new taxes were in the budget. Would it be necessary to raise taxes to balance the budget?
Looking at the list of tax expenditures in the budget, that is tax revenues lost because the government has exempted some areas from taxation, the deficit seems unwarranted.
Fifty-three of these exemptions are listed in the budget paper, ranging from personal income tax exemptions to provincial sales tax exemptions for industry and agriculture.
The justification or the exemptions [included in the budget paper] is “tax relief for individuals (and in some cases) businesses who purchase essential items thereby reducing the overall cost and contributing to affordability.’’
Also listed is helping ensure competitive conditions for key sectors.
The tax exemptions will cost the provincial government revenues of more than $4.5 billion in this year.
Fourteen categories are exempt from provincial sales tax costing the government and taxpayers just over $1 billion dollars.
These include popular tax breaks such as groceries, prescription drugs, reading materials, natural gas and electricity.
Three of the largest PST losses in revenue are related to agriculture.
Exemptions of farm machinery and repair parts are worth $121 million; fertilizer, pesticide and seed are worth $339 million.
A farm exemption for sales tax on agriculture life and health insurance will cost the government $177 million.
The cost of these three exemptions has increased by $81 million since 2021.
The political justification for these exemptions is based on keeping agriculture competitive and the voting power of farmers.
No review has been done to determine if these exemptions are still necessary at this level or at all.
Most farmers have incorporated and pay only one per cent provincial income tax on the first $600,000 taxable income so why is this tax break so vital?
Exemptions under the small business tax rate will cost the government $693 million this year.
Social goals are the focus of many other tax exemptions.
Pension plan contribution exemptions will cost $359 million. The basic personal tax exemption will cost $1.3 billion. Other tax credits linked to the federal government tax policy will cost about $600 million.
Exemptions under the small business tax rate will cost $692 million, up by $121 million since 2021.
It appears the deficit of $273 million wasn’t necessary had some tax exemptions been tweaked.
The time has come for a comprehensive review of the tax expenditures by an independent third party like the provincial auditor.
Ron Walter can be reached at ronjoy@sasktel.net
The views and opinions expressed in this article are those of the author, and do not necessarily reflect the position of this publication.
