Sask. government reverses corporate tax reduction plan

Premier Brad Wall said Thursday a corporate income tax rate reduction was no longer necessary to be competitive in Western Canada because of changes in British Columbia. The one per cent reduction was first announced in the 2017-18 provincial budget.

Rate reduction announced in 2017-18 provincial budget no longer necessary, Brad Wall says

Premier Brad Wall said a reduction to the corporate income tax promised in the latest budget is no longer necessary — a position he said will be expanded upon during next week's throne speech. (Audrey Neveu/CBC)

The Saskatchewan government plans to reverse a tax decision announced in the latest provincial budget.

On Thursday, Premier Brad Wall said the reduction to the corporate income tax is no longer necessary — a position he said will be expanded upon during next week's throne speech.

Last spring's budget promised a one per cent reduction to the corporate income tax rate. 

"The government's probably going to move so that we can maintain that competitive advantage, but not reduce the tax by a point," Wall said Thursday.

The premier said the government wanted the Saskatchewan rate to be the lowest in the country. Now, increases to the B.C. corporate income tax rate brought on by new political leadership in that province mean Saskatchewan can be competitive in Western Canada without the cut, he said.

Now, the government will need to find a place for that money. 

"We've asked ourselves, is there something we can do on the small business side instead?"

Wall said small businesses pay low rates until hitting an income mark around $500,000, and then have to pay the corporate rate.

"Can we look at changing that and advantage our small businesses, maybe provide a bit of a shot in the arm to those, to that sector that we know creates 80 per cent of the jobs in the province?"

The budget announced that the provincial corporate income tax rate would drop from 12 to 11.5 per cent on July 1, and then to 11 per cent on July 1, 2019.

It wasn't clear Thursday if the government would reverse the 0.5 per cent reduction made in July, in addition to halting the remaining reduction planned for 2019, or if it will keep last July's reduction in place.

A spokesperson for the government said that information will be released with announcements in the throne speech and throughout the upcoming session.

NDP interim Leader Nicole Sarauer said the reversal is a reflection of people's anger over the budget.

"If the Sask. Party had actually listened to people prior to ​this budget, we wouldn't be in this situation to begin with," she said. "What we're seeing now is a Sask. Party that's scrambling."

She said there are worries about what the government has planned for the future.

Saskatchewan Party leadership hopeful Scott Moe's proposed a plan to balance the budget by the 2019-2020 fiscal year, in which said the government could find savings by delaying the reduction to corporate income tax. 

He suggested the government could save about $50 million. 

The legislature reconvenes on Oct. 25.