Saskatchewan Government’s Decision to Raise Small Business Taxes is Misguided
The Saskatchewan government has announced that small businesses in the province will face higher taxes on Canada Day, after the small business tax rate was cut to zero last year. While the government may argue that this tax cut was always meant to be temporary, it is clear that cutting taxes for small businesses is a good idea that should be continued permanently. Raising taxes now is the wrong move, given that many small businesses are still struggling, and lower taxes help boost the economy.
The Benefits of Lower Taxes for Small Businesses
The Saskatchewan government has acknowledged the benefits of lower taxes for small businesses, with Finance Minister Donna Harpauer stating that reducing taxes for all small businesses in the province over the next three years will help them recover from the pandemic and retain and hire more workers. However, this logic seems to have been forgotten with the recent announcement of higher taxes, which will only increase the burden on small businesses already struggling to get by.
Small Businesses Need Relief, Not More Costs
Small businesses operating in Saskatchewan are already grappling with high inflation, with the average small business in the province paying even more to operate. Adding more taxes on top of this is like getting punched in the stomach after getting kicked in the head. On top of this, some companies already operate on thin margins, so a few extra dollars in the pockets of business owners each month could make or break their small businesses.
Moreover, the Saskatchewan government collected a record amount of taxes last year without taxing small businesses. The windfall was over $1.1 billion more than originally projected, and not collecting the tax in the last three years saved small businesses about $189 million, an average of $6,100 per small business. With a billion-dollar surplus projected for 2023, the government can surely afford to save small business owners a little money.
Small Business Tax Cuts Make Saskatchewan More Competitive
Keeping the small business tax at zero percent makes Saskatchewan more competitive with its neighbors. Manitoba’s small business tax is also zero percent, and in Alberta, the NDP is pushing for the removal of the small business tax. If that happens, there will be provinces on both sides of Saskatchewan where it will be cheaper to run a business, making it difficult for Saskatchewan to attract new job creators. Small businesses make up the backbone of Saskatchewan’s economy, and with over 31,000 businesses in the province set to see their taxes go up in July, this government move is a misstep.
Conclusion
Given how important small businesses are to Saskatchewan’s economy, we need to recognize that the government’s decision to raise small business taxes is misguided. Small businesses need relief, not more costs, and permanent tax cuts for small businesses can help boost the economy. Keeping the small business tax at zero percent makes Saskatchewan more competitive with its neighbors, and it is a move that will help ensure fiscal competitiveness with similar businesses in other jurisdictions.
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On Canada Day, small business owners in Saskatchewan will pay higher taxes.
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That’s because the Saskatchewan government is raising the small business tax rate after cutting it to zero in 2020.
The government will argue that this tax cut was always supposed to be temporary. But it’s not every day that a politician stumbles upon a good idea, and cutting taxes for small businesses is a great idea. The government needs to recognize that it is doing the right thing and permanently eliminate the small business tax.
Raising the tax now is the wrong move because small businesses are still struggling, the government doesn’t need more tax money, and lower taxes help grow the economy.
Last year, inflation in Canada reached 6.8 percent. That means the average small business in the province is paying even more to operate. Many companies already operate on thin margins, and adding more taxes on top of squashing inflation is like getting punched in the stomach after getting kicked in the head.
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The government knows the benefits of lower taxes for small businesses.
“Reducing taxes for all small businesses in our province over the next three years will help them recover from the pandemic and allow them to retain and hire more workers,” Finance Minister Donna Harpauer said after cutting the tax in 2020.
That logic has not changed. Low taxes still help businesses deal with economic woes, and despite weathering the pandemic, experts predict a recession in the near future. With so much uncertainty, it is foolish for the government to impose even more costs on small businesses.
A few extra dollars in the pockets of business owners each month could make or break their small businesses, but it’s hardly a drop in the bucket for the provincial government.
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The Saskatchewan government collected a record amount of taxes last year, without taxing small businesses. He made a windfall of more than $1.1 billion more in business taxes than he originally projected. Taxing small businesses again would only increase that windfall by just eight percent.
Keeping the small business tax at zero percent means Saskatchewan is more competitive with its neighbors. Manitoba’s small business tax is also zero percent. And in Alberta, the NDP is pushing for the removal of the small business tax.
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If that happens, there will be provinces on both sides of Saskatchewan where it will be cheaper to run a business. That makes it difficult for Saskatchewan to attract new job creators.
Small businesses make up the backbone of Saskatchewan’s economy. More than 31,000 businesses in the province will see their taxes go up in July due to this tax increase.
Small businesses employ nearly 150,000 Saskatchewans. Giving a hand to small businesses is something that helps people from all communities in the province.
And if all that doesn’t convince the government to end the small business tax, maybe its own budget will. A low tax rate for small businesses “will provide tax relief to key sectors of the provincial economy and help ensure fiscal competitiveness with similar businesses in other jurisdictions,” according to the budget documents.
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Small business owners create jobs and help grow the economy. The government needs to get rid of the small business tax for good.
Gage Haubrich is the prairie director of the Canadian Federation of Taxpayers.
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https://thestarphoenix.com/opinion/columnists/opinion-saskatchewan-needs-to-end-small-business-tax-not-restore-it/wcm/aef15358-80d3-4de9-8555-e2ae3f824a2d/amp/
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