Saturday, October 16, 2010

Jack Vicq Rides Again

By Erin Weir
The Progressive Economics Forum

Jack Vicq is Saskatchewan’s answer to Jack Mintz, a relentless advocate of lower taxes for high-income individuals and profitable corporations. His first report for the provincial government presaged massive personal income tax cuts in 2000 (which soon pushed the province into deficit). His second report for the provincial government presaged massive corporate tax cuts.

Saskatchewan business organizations just released a third Vicq report, calling for yet more personal and business tax cuts. As usual, lower taxes are supposedly needed for “competitiveness,” a term repeated 58 times in the report.

The executive summary claims, “The challenge of a competitive tax system hits hard in Saskatchewan. Saskatchewan is neighbour to British Columbia and Alberta - the two jurisdictions in Canada with some of the lowest tax rates.” Of course, Saskatchewan actually neighbours Manitoba and Alberta. But since Manitoba has higher taxes, Vicq prefers BC as a comparator.

Either way, we should question the premise that Saskatchewan is uncompetitive. The first two Vicq reports were released in a very different context. Despite a decent provincial economy, Saskatchewan was experiencing out-migration and arguably not getting its rightful share of business investment. While these shortcomings had little to do with taxes, there was at least a case to be made.

Things have changed. Since Vicq’s last report in 2005, business investment in Saskatchewan increased by 55% through 2008. During the same period, investment rose by only 27% in Alberta and 32% in BC.

Statistics Canada has not yet released this provincial data for 2009. But by all accounts, Saskatchewan weathered the recession better than uber-competitive Alberta and BC.

Statistics Canada’s latest population estimate indicates that Saskatchewan had the fastest population growth of any province over the past year. So, where is the evidence of people and businesses fleeing allegedly high taxes? Where is Saskatchewan’s presumed competitiveness problem?

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