Taxes are the price we pay for citizenship in a democratic society. A fair and progressive income tax system, where our citizens are asked to pay taxes in proportion to what they take out of our economy, is an essential element of a civilized society if we are to maintain our physical and societal infrastructures - roads, utilities police, medicare etc.

The Saskatchewan Seniors Mechanism(SSM) applauds the provincial governments stated commitment to make the personal income tax system more responsive to peoples  needs, simpler and fairer. However, when it comes to making the personal income tax system more competitive, we should make sure that we are responding to the needs of all of the people of Saskatchewan and not just the wealthy and corporate sectors. Competitive means distinctly different things to different people.

Tax breaks that mainly benefit the wealthy and corporate sector do very little to respond to the needs of lower and middle income people who are currently paying a disproportionate share of the income tax load.

The SSM wishes to emphasize, that across Canada unique social and economic circumstances exist in each province. Each provincial government has its own perception of tax fairness. Each province has its own private/public mix of services. Citizens of Saskatchewan, living in a sparsely-populated, non industrial province in the middle of the continent, with only a moderate store of natural resources still have an enviable quality of life. Our neighbouring province of Alberta may have nominally lower taxes but has more resources, lower provincial debt, but charges a substantial public health services premium. It is difficult if not impossible to make any kind of meaningful competitive comparisons between provinces by simply comparing tax rates only. We have to look at the services which are paid for collectively through the tax base and those which are paid for privately or by means of premiums or some kind of service fees.

It is also very difficult to discuss our provincial personal income tax system when the ever changing federal income tax system is in such disarray and is patently unfair and/or perceived as being so.

In our opinion, what Canada desperately needs as

we enter the new millennium, is a >truly reformed= fair and progressive personal income tax system with sufficient flexibility to take into account the unique social and economic circumstances which exist in each province. Unfortunately, whether the challenges are too big or the politicians too small, it appears that we may have to settle for something less.

Suggested guiding principles to be considered in a review of our personal income tax system

• As a society, we decide on the private/public services mix we want. In Canada, we have decided over the years to meet many of these needs publically. This decision has in our opinion, been one of the major reasons for Canada being declared, for the last several years, the best country in the world in which to live, and Saskatchewan the best province. Any move to reduce our taxes will inevitably mean changing the mix of public and private we have chosen.
  
• Is there really a tax rage out there? Except for the unfairness of the shift, over the last two decades, in tax liability from upper income earners to middle and lower income earners, Canadians seemed pretty satisfied with our tax system. It was some captains of industry, media pundits and many politicians who insisted that Canadians were in a tax rage. Recent polls still show quality of health care as the most important issue, with taxes low on the list. We must not let special and vested interest groups stampede us into thinking that taxes and governments are bad. If a service is important to us, we will always afford  it, one way or another. Providing health care publicly is actually more affordable than providing it privately.
  
• Blanket declarations promising tax cuts should be approached with great caution. Those leading the chorus to cut taxes are not the poor or the middle class, who receive many of the benefits provided by our tax system. The tax-cutting zealots are the wealthy and the political ideologues of the right. The real attack is not on taxes per se, but on what our taxes provide. The attack is on medicare, social assistance, public education, public libraries, and public broadcasting. Tax breaks for the wealthy only make the rich richer, the poor poorer and increase the income gap between the rich and poor. Tax break monies that find their way into the speculative or paper economy, or end up in off-shore tax havens, do very little to make our personal income tax system Amore responsive to peoples  needs or to attract jobs and investment to Saskatchewan.
  
• Any tax cuts should be in the form of higher personal exemptions for low and middle income taxpayers. It would be more appropriate to work to reduce child poverty, homelessness and inadequate housing than to give tax breaks to the wealthy. Few people are likely to leave Saskatchewan because they are making too much income.
  

• One of the fundamental principles of income tax is progressivity i.e. the more money you make, the higher tax rate you pay. Progressivity also helps to redistribute some money from the more well-to-do to the less well-off. The income gap between rich and poor has grown much larger in recent years. The tax cut enthusiasts want to go even further in that direction and some are even calling for a flat tax where everyone pays the same rate. That would mean that if we make income tax any flatter than it is right now, we will make our total tax system even more regressive. That means that the total tax system will be taking money from the poor and giving it to the rich!!
  
  The tax-cutters would have us believe that Canada=s productivity is low compared to our competitors (especially the US ) and that this gap will be miraculously rectified by slashing taxes. It is very difficult to measure and compare productivity across firms, much less across countries, and even harder to ascribe causes for those differences. Recent Canadian figures suggest the productivity gap is far smaller than the pessimists claim. During the Regan era of large tax cuts in the US, productivity was low but the tax cuts resulted in a massive increase in the national debt. During the same period, in the province of Ontario long before the Harris tax cuts, productivity was much higher than it was in the US. In general, economic literature has failed to establish any link between taxes and productivity.
  
• Tax cut supporters would have us believe that Canada is suffering from a brain drain. There is simply no serious brain drain. Statistics Canada reports that Canadians emigrating to the US during the 1990's, even in absolute numbers, are less than 1/3 of those who left from 1955 to 1969! Surveys of Canadians living in the US, indicate that most of those who do migrate to the US are not doing so because of high taxes. #

Submitted by The Issues Committee of the Saskatchewan Seniors Mechanism

Information from Ont. Coalition for Social Justice.