After eight months of study and a bill for $500,000, the Saskatchewan government says it needs more time to decide how kindergarten to Grade 12 education will be funded.
Learning minister Andrew Thomson said last week he could not immediately commit to implementing commissioner Ray Boughen’s recommendation to alleviate the property tax burden. The report suggested hiking the provincial sales tax by one percent in 2005 and applying it to restaurant meals and snack food.
That would shift about $200 million off property and onto the sales tax. Last year Saskatchewan spent $1.29 billion on K-12, with $510 million from the provincial general revenue fund and $705 million from property tax. Another $75 million came from sources such as tuition.
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In his final report released Jan. 8, Boughen also recommended the government find $25 million each year for four years after that, creating a $100 million reduction on property tax by 2009-10.
He said that would result in an average 43 percent decrease in education property tax.
Thomson called Boughen’s recommendations provocative and said they required closer scrutiny.
“There was nothing when we set up the commission that said we would accept en masse the recommendations,” Thomson told reporters.
In addition to the tax shift, Boughen recommended:
- Limiting the ability of local governments and school boards to increase mill rates during the three-year transition period.
- Establishing a provincial education mill rate on all commercial and grants-in-lieu properties and redistributing it through an operating grant program.
- Establishing a task force to promote school division amalgamation.
- Revising the Foundation Operating Grant that most but not all school divisions get.
- Transparent accounting for funding allocated to the SchoolPlus program from various government departments.
- Discussion among school systems regarding ways they can share costs.
- Removing education property tax from seasonal property.
Reaction to the recommendations was mixed.
Neal Hardy, president of the Saskatchewan Association of Rural Municipalities, said it is fairer to put education costs on the sales tax, but the recommendations don’t provide much actual tax relief.
“If the government decides to follow the recommendations then they should do them all,” said Hardy. “If they pick and choose … then I think rural Saskatchewan will get beat up pretty badly.”
Saskatchewan School Boards Association president Lance Bean said school boards were generally pleased with the report but are concerned about the idea they may be forced to amalgamate.
They are also concerned about the possibility that they would be unable to raise mill rates if necessary. Saskatchewan teachers and school boards are in provincial bargaining this year.
“We need to have the flexibility to cover those types of costs and other inflationary costs,” said Bean.
Business and taxpayer groups were unhappy with the prospect of a higher PST.
“We’re just going to facilitate cross-border shopping and create a cross-border shopping frenzy and that’s just not healthy,” said Marilyn Braun-Pollon of the Canadian Federation of Independent Business.
Saskatchewan has the lowest PST of all the provinces that collect one. However, Alberta has no sales tax.
Clay Dowling, president of the Saskatchewan Chamber of Commerce, said business would be hit hard if the PST rose to seven percent.
Boughen said he knew not everyone would be happy with his ideas.
“I think people will say if the PST goes up by one and on the other hand my taxes fall down in terms of percentage that I’m paying on the education side of taxes, that’s kind of OK. That’s kind of palatable,” he said. “We on the commission are convinced that this makes sense.”
