Saskatchewan farmers will benefit from provincial income tax cuts announced last week, said agriculture minister Bob Bjornerud.
“Most of them are in taxable positions from one time to another,” he said at the legislature. “I think this year, (the) crop side is going to be a point where many have to pay more income tax.”
Premier Brad Wall announced the changes that will take effect this tax year.
He said the province has shed its reputation as next-year country.
“This is this-year country,” he told reporters Oct. 21.
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An increase in the basic personal exemption results in the largest single-year tax cut in the province’s history, he said.
Ahead of a November midterm financial report and a day before the fall legislative session began, Wall announced a three-pronged plan to reduce taxes and debt while investing in infrastructure.
At the first quarter of the fiscal year, the province projected a $3.1 billion surplus and was under some pressure to allocate it. Once the midterm results are compiled, officials will know exactly how recent economic turmoil has affected its budget.
But Wall said everyone should share in Saskatchewan’s new prosperity.
The government raised the basic personal exemption and spousal exemption by $4,000 to $12,945. The child tax credit went up by $2,000 to $4,795.
The savings will amount to $440 per year for an individual or $1,320 for a working family with two children. About 80,000 people will go off the provincial tax roll.
“One in every five people who were paying provincial income taxes this morning will not be paying any provincial income tax as a result of this announcement,” Wall said.
As well, the Saskatchewan sales tax credit has been replaced with a new low-income tax credit, which will mean about 300,000 people will benefit compared to 270,000 now.
The low-income credit is retroactive to July 1, 2008; the change in the basic personal exemption is retroactive to Jan. 1.
These changes will cost the province $334 million this year and $300 million annually after that.
Wall said the taxpayer-supported debt will drop to $4.2 billion with a payment of $1 billion from the Growth and Financial Security Fund. That is $500 million more than had been planned.
And, the 2009-10 budget will see $500 million added to the Ready for Growth infrastructure program announced last year, taking it to $1.5 billion. Details won’t be available until after the spring budget.
Opposition leader Lorne Calvert said he couldn’t fault the announcement because it would be like debating with himself.
He said the last significant tax change like this came in 2000-01 when the savings to a family were about $1,000.
“Our surplus at that time was $9.4 million, not $3 billion,” he noted.
“And the price of oil at that time was something like $20 or $22.50 a barrel.”
Calvert said Wall has the difficult decision of how to spend money, while the previous NDP government had the task of building the capacity to earn the money.
He also pointed out that income tax cuts won’t help people pay escalating home heating bills or rent.
Wall said broad based tax relief is better public policy than rebates on utility bills. He suggested people would come out ahead in the end.
The financial measures announced last week also mean the government will have about $1.9 billion left in its savings account.
“There are those who may accuse our government in the days ahead of sitting on a mountain of money as a result of this $2 billion fund. I may have used those terms in the past,” he told reporters.
“I’m telling you today, this is a rock on which we can build our economic future.”
