By: Graham Lane
Published: April 7, 2017, Winnipeg Sun
Saskatchewan was once a poor little brother to Manitoba. No longer. Today Saskatchewan enjoys substantially higher per capita incomes within a stronger economy. One marked by much higher private investment levels – new factories, more processing – predictors of future growth. Furthermore, it has achieved this without getting massive equalization payments from Ottawa. Since 2008, Manitoba has chalked up a staggering $18.5 billion in equalization transfers from Ottawa. Saskatchewan got zilch.
The usual excuse is that Saskatchewan is more blessed with resource wealth. But it’s more complicated than that.
The Saskatchewan NDP pushed through major income and corporate tax cuts in 2006. And, the earlier Grant Devine Conservatives privatized the Potash Corporation – turning it into a dominant global player, investing billions in mine expansions while generating huge provincial tax revenues.
Now, Saskatchewan’s Brad Wall remains Canada’s most popular premier, an ambassador of our neighbouring province’s expanding economy. The lonely critic of the federal government’s so-called climate action plan, Wall is a hero for vowing to fight Trudeau’s carbon tax plans – to the Supreme Court if need be.
Here, it is a safe bet that the Pallister Government will succumb to potentially fatal advice and push through a new “made in Manitoba” carbon tax. Next week’s budget will pointlessly encumber Manitoba’s economy with increased heating, driving and overall energy costs.
Both prairie provinces must deal with enormous deficits. Contrasting the Wall and Pallister governments’ approaches provide valuable clues on how they plan to stabilize their respective finances. Let’s compare the March 23rd Wall budget with what we expect from next week’s Pallister budget.
Wall’s plan is robustly pro-investment, his budget features a 3.5% cut in compensation for MLAs and Ministers, to be matched by similar reductions across the public sector. Other cuts include closing down the money-losing crown corporation bus company. Wall targets a balanced budget in 3 years.
On the revenue side, his budget shifts the tax load from income to consumption, combining income tax cuts (including an increase in the low-income tax credit) with a 1% increase in their PST. He sees income taxes as a productivity drag. Most significantly, Wall eliminates sales tax exemptions, setting the stage for a harmonized sales tax with the GST. This would eliminate sales tax on business equipment and other capital purchases – further boosting private investment and their economy.
It’s a different story here in Manitoba. Public compensation is somewhat frozen, not trimmed, and the budget is to be balanced in 8 years (2 terms!). Pallister would create a new crown corporation to promote energy efficiency – a useless but good-sounding exercise as he continues to waste even more billions on the NDP’s unneeded Hydro expansion.
On taxes, all signs say the coming budget will introduce a new PCT (Pallister Carbon Tax), without a referendum. The PCT – a new energy tax – will whack producers, farmers, and everyone else that drives or heats a building in one of the planet’s coldest places.
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