Future of fuel tax exemptions considered as Sask. aims for balanced budget

After the 2016/17 budget was delivered, the province promised to balance the books this year while sitting on a $400-million deficit. Now, that figure has ballooned to $1.2 billion and the provincial government is rethinking its deficit timeline.

“So you’ll hear in the coming days as to whether or not that balanced budget plan is possible this year,” Premier Brad Wall said on Tuesday.

This is good news for Jason Childs, an associate economics professor at the University of Regina.

“It shows they’re thinking, rather than just doing it knee-jerk, which is really positive,” he said.

“Rather than try to shock the system all at once with that cold shower approach, which we’ve seen work very poorly in other jurisdictions, let’s take a thoughtful, more deliberate approach, and get this thing done right.”

Premier Wall addressed delegates at the Saskatchewan Association of Rural Municipalities (SARM) convention in Saskatoon Wednesday. He said rural communities will have to do their part to help balance the budget, which may include changes to tax exemptions and PST.

READ MORE: Sask. rural municipalities will need to help tackle deficit: Premier Brad Wall

Political columnist with the Leader Post Murray Mandryk said taxation isn’t a popular revenue discussion, but it needs to be addressed.

“You look at the fuel tax, you look at breaks farmers are getting on their PST for fertilizers and pesticides, and farm machinery, there’s a lot of money to be considered in that,” he said.

In the 2015/16 fiscal year, users of the fuel tax exemption missed out on having to pay nearly $156 million.

“If government considers that they’re going to have to consider a lot of other PST things too. That could be things like your restaurant meals,” Mandryk added.

Mandryk cautions that smaller farm operations depend on these tax breaks, but larger operations would have an easier time absorbing the hit.

Childs said that in a climate where resource revenues are declining, you can’t tax agriculture too heavily.

“Anytime you increase costs on a variable revenue you run the risk of putting people in the red very quickly. So I would recommend if you’re going to move on that file to move very slowly,” Childs said.

Childs believes three years would be a good timeline to aim for a balanced budget. He said this would give the government time to act deliberately, and allow the public to adjust to changes in taxation and service delivery.

Premier Wall and other members of cabinet have repeatedly said everything is on the table during their budget deliberations. Finance Minister Kevin Doherty will deliver the budget on March 22.

It’s been no secret that cabinet are looking to a 3.5 per cent decrease in public sector compensation as a way to save money.

READ MORE: Sask. government announces move to private custodial contractors, saving $3.5 million and cutting public jobs

Mandryk said the government can’t focus on expenditures alone, using the privatization of government building cleaning services as an example.

“There’s bigger items in play. They happen to be on the revenue side because you can’t eliminate spending that dramatically.”