Sin tax hikes aid balanced budget

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BUDGET-DAY DEBATE: Finance Minister Ken Krawetz, left, Premier Brad Wall and NDP MLA Trent Wotherspoon, who delivered the Opposition response, all had lots to say about the provincial government's spending plans on Wednesday.

Photograph by: All Bryan Schlosser, Leader-Post , StarPhoenix

Premier Brad Wall said the top priority for the 2013-14 Saskatchewan budget was balancing it - not making history.

The budget is in the black thanks to alcohol and tobacco tax hikes, a deferred corporate tax cut, and limiting overall spending increases to just 3.1 per cent.

"I'm not sure it's a history-making budget in and of itself," Wall said Wednesday at the legislature after the budget was introduced.

"But I think it will stand out as part of a series of budgets, of balanced budgets."

But Opposition NDP finance critic Trent Wotherspoon countered that the impact will be felt by future generations.

"This is a credit-card budget, borrowing from our future, asking kids to pay for it later and kicking responsibility down the road," he said.

Finance Minister Ken Krawetz told reporters the budget - the theme of which is "Balanced Growth" - balances both numbers and priorities.

Krawetz said "two-pack-a-day smokers will not be pleased," with the government expecting to take in $47.5 million in additional tobacco revenue in 2013-14.

The tax rose by four cents a cigarette - with a comparable increase on cut and loose tobacco - at midnight on budget day.

But Lynn Greaves of the Saskatchewan Coalition for Tobacco Reduction said health groups are happy with that.

"Tobacco taxation is the most effective tobacco reduction measure there is," Greaves said, noting that with 25 cents of provincial tax per cigarette, Saskatchewan is "at the top of all of the provinces."

Also helping the government's bottom line, with an anticipated $10 million in extra revenue, all categories of beverage alcohol in the province will be marked up by about three per cent effective April 1.

"When you take a look at the purchase of a bottle of alcohol worth about $30 ... you might be looking at something like 50 or 60 cents," Krawetz said.

The last time the government raised the prices of tobacco and alcohol was in its 2010-11 budget.

As part of its balancing efforts, the province is also delaying phasing in a reduction of the corporate tax rate from 12 per cent to 10 per cent.

The Saskatchewan Party government's growth plan promised that would happen by 2015 to match Alberta and B.C. The total cost would be about $175 million, Krawetz said.

"We are committed to competitive corporate taxes ... but we're not going to do it at the expense of a balanced budget," Wall told reporters.

Steve McLellan of the Saskatchewan Chamber of Commerce said, "The No. 1 issue with businesses right now isn't the issue of corporate taxes, it's the issue of not enough workers" - something the government addresses in the budget with skills training initiatives, particularly for aboriginal people.

The budget also changes the royalty structure for uranium mining, which will cost about $15 million.

"Right now our uranium royalties are not competitive ... We want to change that," Wall said, predicting the change will bring in more money and create more jobs in the long term.

Starting to phase out the ethanol fuel tax grant will save about $8 million this year - and represents a continued move away from grants or credits for specific sectors, Wall said.

Michael Atkinson of the John-son-Shoyama Graduate School of Public Policy said overall, "It's hard to be critical of this budget, because they haven't ventured out too far."

Atkinson noted resource revenue estimates this year aren't as high as last year's, but are up from what the government actually expects to have received in 2012-13, a year that saw declines in oil, gas and potash prices.

In total, expected 2013-14 revenue of more than $11.6 billion exceeds anticipated expenses by only about $65 million, before half of that is transferred to the Growth and Financial Security Fund.

That fund is changing, with new, separate pots: About $513 million is to be retained for 'security,' while the rest of the estimated $662 million closing balance will go address 'growth' needs. The government isn't allocating any of that money until the impact of spring flooding is known, however. On a summary financial basis, which takes into account all government operations, including the Crown corporations, the government expects to see a surplus just shy of $150 million in 2013-14.

Government debt is held to about $3.8 billion, but Crown corporation debt is driving up total public debt to an estimate of almost $10.5 billion for 2014.

The budget also contemplates addressing infrastructure needs, including the use of public-private partnerships for roads, schools and other facilities.

Wotherspoon criticized increasing total public debt levels, the intention to use public-private partnerships and lower-than-hoped allocations for universities, K-12 education and health care systems.

He said he was pleased to see additional funding for Alzheimer's-related programming, improvements to home care and support for women's shelters.

No one got pink slips, but the government's plan to reduce the public service was supported in the budget by 600 fewer full-time-equivalent jobs, a moved lauded by the Canadian Federation of Independent Business.

But Bob Bymoen of the Saskatchewan Government and General Employees' Union blasted the government for the cuts, noting "they continue to contract out the work at significantly higher costs."

jcouture@thestarphoenix.com

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Source: http://www.thestarphoenix.com/news/hikes+balanced+budget/8129676/story.html

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