Wall 'softening up public opinion,' preparing public for tax increases: U of R prof

It looks like people in Saskatchewan will need to dig into their pockets after this year's budget.

Premier says aim is to return to balanced budget within 3 years

Saskatchewan Premier Brad Wall talks to members of the media in Regina. (Jennifer Graham/The Canadian Press)

It looks like people in Saskatchewan will need to dig into their pockets after this year's budget.

"This is not going to be a popular budget," Premier Brad Wall told the media on Monday morning.

In a video message released before his scrum with reporters, Wall hinted that consumption taxes, like the provincial sales tax, would likely be going up. Meanwhile, income taxes could be decreasing.

Speaking to reporters, Wall wouldn't confirm that the PST was going up.

"It might ... we haven't ruled anything out," Wall said. 

"We're just a couple of days away from seeing what's in the budget. I wouldn't want you to run out and make purchasing decisions today based on this scrum."

Softening public opinion

Ken Rasmussen, a professor at the University of Regina's Johnson Shoyama Graduate School of Public Policy, says some options available to the government are to increase the PST, tax diesel and gasoline or implement a harmonized sales tax. 

Rasmussen said diesel and gasoline should be taxed with a sensible distribution of the burden across all provincial stakeholders. 

"A carbon tax would have been a reasonable, sensible tax if the [provincial] government hadn't dug its heels in, in terms of its ability to generate revenue for the province," he added. 

Describing the Premier's Facebook update as odd, Rasmussen said Wall is taking some heat off of others in government, such as Finance Minister Kevin Doherty.

"[The Premier]'s obviously softening up public opinion for tax increases, whatever he wants to call them, consumption taxes are going to go up," he told CBC Radio's The Afternoon Edition on Monday. 

Rasmussen said Wall is prepared to "expend" some of his personal popularity.

"[Wall] has stood up and as leader of the government, he's going to wear some of this," Rasmussen said. 

Potentially increasing so-called sin taxes on products like cigarettes or alcohol can only go so far as well, he added.

Rasmussen called Saskatchewan's liquor prices some of the highest in the world, and mentioned studies which say people just turn to the black market for those things if the prices get too high. 

Moving away from resource revenues

Wall also hinted at a shift away from resource revenues to better position the province in the long term.

"We need to take this opportunity, this challenging time, to begin to move away from an over-reliance on resource revenue," he said.

"Some might say it's about time, that governments in western Canada and resource-dependant governments should have been doing this a long time ago. Fair enough. We need, though, to start now."

He said many oil companies are still running right now, despite challenging economic conditions, and the government doesn't want to hurt a fragile sector.

"In Weyburn, they're looking for people to work in the oil and gas industry, at $50 a barrel," he said. "That industry has reduced its cost structure so it's competitive again at $50 a barrel ... But $50 a barrel represents a significant drop in revenue from where this province has been for almost 10 years."

At the same time, cabinet ministers have been hinting at widespread cuts, including slashing public sector worker compensation by 3.5 per cent.

Balancing budget in 3 years

Wall said the province would have a balanced budget in three years, and had a specific plan for reaching that goal.

"We didn't want to shock the economy," he said. "And we didn't want to completely undermine public service in the province with significant reductions, although you will see reductions in the budget. The scope of them would have been drastically different had we moved to balance it in this year." 

We have a premier who's breaking promise after promise.- Trent Wotherspoon, NDP leader

Meanwhile, the opposition NDP said it wasn't impressed with the premier's message.

"The premier is making a mockery of any level of accountability to Saskatchewan people," said Opposition leader Trent Wotherspoon. "A two-minute Facebook update is no replacement for coming clean on the state of our finances in a financial report."

Wotherspoon accused Wall of not keeping his word about stewardship of the province's finances.

"We have a premier who's breaking promise after promise," he said. "[He] clearly lied to Saskatchewan people about the state of our finances, about the promises to balance our budget, about his promises to not hike taxes."

Business groups express concerns

Meanwhile, business groups are already concerned about what any consumption tax increase could mean for them.

The Saskatoon and Region Home Builders' Association worried that increased taxes could hit the construction industry and, by extension, the province's growth.

As well, the Agricultural Producers Association of Saskatchewan voiced its concerns about any changes to agricultural taxes.

"Tax exemptions are not subsidies," wrote association president Todd Lewis in a news release.

"For example, the vast majority of tax exempt fuel is not used on the provincial highway system, but is used for field work, or for hauling on the rural municipal roads that farmers already pay for through our property taxes."

Lewis noted that farmers generated $14 billion in sales in 2015, which was more than 20 per cent of the province's gross domestic product. 

"Removal of farm tax exemptions would cost our industry $380 million," he said. "Because we don't set our own prices, any increase in cost does not get passed on to our customers; it comes straight out of our bottom line, and this impacts the future of our industry, and the provincial economy as a whole."

The budget will be officially released on Wednesday.

With files from CBC Radio's The Afternoon Edition