Much political back-patting occurred when the Saskatchewan Party Government tabled a $463 million deficit budget in the legislature.
The deficit came down by $2.1 billion from the previous year — a year of extraordinary pandemic measure spending.
Never addressed was the real question: is there a need for a deficit budget at all?
This review will show how the deficit could be eliminated and relieve the need to repay hundreds of millions of dollars in debt in future.
It doesn’t take a rocket scientist to examine the few pages in the budget devoted to tax expenditures to find new sources of revenue and eliminate the deficit.
Tax expenditures are government estimates of lost tax revenues from tax exempt sources.
The tax expenditures fall into three main categories: social measures to assist families, individuals and the sick; measures to encourage savings or retirement; measures to build the economy.
Exemptions to the Provincial Sales Tax (PST) total $972 million. Fuel tax exemptions amount to $137 million. Income and corporate income tax lost revenues amount to $1.47 billion.
Agriculture was the recipient in 2021 of $506 million in tax breaks that would be paid if not for exemptions.
Agricultural subsidies — crop insurance premiums, income supports, rainy day funds and myriad of grants for everything from marketing grain to digging water wells — are justifiable.
These support subsidies ensure a secure supply of food, keep our industry competitive with the world where some countries offer more generous subsidies and subsidies support exports of food.
Most of the tax exemptions for agriculture in the Saskatchewan budget are not nearly as justified. In fact, it can be argued they create a rural-urban division most of us couldn’t imagine.
How fair is it that farmers avoid $147 million PST on insurance premiums?
How does government justify exempting farmers from $278 million PST on fertilizer, pesticide and seed? Or $80 million for being a farmer? Or $107 million PST on farm machinery and repairs?
Once upon a time as the fairy tales go that was justifiable on the grounds that farming was a hit and miss high risk business.
During the last 15 years farm incomes have never been so good. In 1981, 61,000 Saskatchewan farmers averaged about $5,000 cash income according to Statistics Canada In 2021, 32,000 farmers averaged $72,500 cash income — an increase of 1,450 per cent.
Those same farmers averaged $15,800 tax exemptions — equal to one-fifth of net farm cash income.
Without those exemptions farmers would be much less wealthy. Certainly some sort of PST level could be attached to these exemptions, or some sort of means test to exemptions to end the deficit.
Small business pays a two per cent corporate tax rate in Saskatchewan creating $464 million annually in lost revenues to the province. Farmers also benefit from low corporate income taxes.
What special breaks do the workers in urban and rural Saskatchewan receive? About $19 million in taxes are lost to income tax exemptions for union and professional dues with $5.4 million lost from allowable expense deductions and that’s it.
The principle of fairness in taxation requires politician to address this matter and level the playing field between the farming community and the wage earning community.
None of the political parties has the guts to do anything about the tax division. The NDP fear losing what little rural support it has while the Saskatchewan Party fears angering its political base.
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.
