Saskatchewan has unveiled its long-anticipated legislation aimed at reducing personal income tax for residents.
Known as the Saskatchewan Affordability Act, the legislation put forward by Premier Scott Moe’s Saskatchewan Party government will raise personal income tax exemptions while indexing tax brackets to match inflation.
It’s a move that the province says will save a family of four earning $100,000 more than $3,400 over a four-year period while two seniors with a combined income of $75,000 will save more than $3,100.
The measures will also see an estimated 54,000 residents exempt from provincial income tax once the changes are enacted, the province said in a press release.
The legislation will introduce the “largest personal income tax reduction in the province since 2008,” Finance Minister Jim Reiter told reporters during a Dec. 2 media scrum.
“We want to get this done as quickly as we can,” Reiter said. “Obviously that was a big campaign commitment for us. People want affordability and we would like to deliver on that.”
Premier Scott Moe said the act delivers on the commitments his party made in October’s election campaign to make life more affordable.
“Our government is taking action to ensure Saskatchewan remains the most affordable place to live, work, raise a family and start a business in Canada,” Moe said in a Dec. 2 social media post.
Opposition NDP finance critic Trent Wotherspoon told reporters his party is prepared to support the legislation.
“We certainly won’t hold this up, but what we need is much more than that,” Wotherspoon said. “We need action now to save families’ hard-earned dollars as they head into the holiday season.”
The Opposition has been urging the government to revoke the provincial 15-cent-a-litre fuel tax and eliminate the provincial sales tax on prepared grocery items. Two of their emergency motions on these issues have failed to gain approval in the legislature.
Reiter said as much as his party would like to offer even more tax cuts than it is already proposing, the province still needs revenue to operate.
The next step, he said, is to write a letter to Ottawa to expedite approval of the personal income tax reductions so residents can benefit from the changes beginning in January. Reiter said the tax reduction is expected to cost $140 million in the first year.
Tax Reforms
The act also includes additional targeted reforms to help seniors, families with children, new post-secondary graduates, persons with disabilities, caregivers, first-time homebuyers, and people undertaking home renovation projects, Reiter said.Here’s a look at some of the changes promised under the act:
- The Disability Tax Credit and the Disability Tax Credit supplement for children under 18 will both increase by 25 percent, in addition to indexation.
- The Caregiver Tax Credit will also increase by 25 percent, in addition to indexation, to provide financial support for families who care for adult children or parents with physical or mental impairments.
- The Graduate Retention Program’s tax credit benefits will increase by 20 percent in a bid to encourage a greater number of young people to live and work in Saskatchewan.
- The Active Families Benefit and the income threshold to qualify for that benefit will double for families whose children participate in sports, arts, cultural and recreational activities.
- The Saskatchewan First-Time Homebuyers Credit maximum benefit will increase by 50 percent.
- The Home Renovation Tax Credit will allow homeowners to save up to $420 per year in home renovation expenses, while seniors undertaking home renovations will be able to save up to $525.
- The small business tax rate will remain at 1 percent, a move that the province says will benefit 35,000 small businesses, resulting in a savings of more than $50 million in corporate income tax annually.
