Opinion: Saskatchewan needs to end small business tax, not restore it

On Canada Day, small business owners in Saskatchewan will be paying higher taxes.

That’s because the government of Saskatchewan is hiking the small business tax rate after cutting it to zero in 2020.

The government will argue that this tax cut was always supposed to be temporary. But it’s not every day that a politician stumbles into a good idea and cutting taxes for small businesses is a great idea. The government needs to recognize it’s doing the right thing and permanently end the small business tax.

Raising the tax now is the wrong move because small businesses are still struggling, the government doesn’t need any more tax dollars and lower taxes help grow the economy.

Last year, inflation in Canada came in at 6.8 per cent. That means the average small business in the province is paying even more to operate. Many businesses already operate on thin margins and adding more taxes on top of crushing inflation is like getting a punch to the stomach after being kicked in the head.

The government knows the benefits that lower taxes have for small businesses.

“Lowering taxes for every small business in our province over the next three years will help them to recover from the pandemic and enable them to retain and hire more workers,” said Finance Minister Donna Harpauer after reducing the tax in 2020.

That logic hasn’t changed. Low taxes still help businesses deal with economic troubles and, despite moving on from the pandemic, experts predict a downturn in the near future. With so much uncertainty, it’s foolish for the government to impose even more costs on small businesses.

A couple of extra dollars in business owners’ pockets every month could make or break their small businesses, but it’s barely a drop in the bucket for the provincial government.

The Saskatchewan government collected a record amount of taxes last year, without taxing small businesses. It raked in a windfall of over $1.1 billion more in business taxes than it originally projected. Taxing small businesses again would only increase that windfall by a mere eight per cent.

Keeping the small business tax at zero per cent means Saskatchewan is more competitive with its neighbours. Manitoba’s small business tax is also zero per cent. And in Alberta, the NDP is pushing for an elimination of the small business tax.

If that happens, there will be provinces on either side of Saskatchewan where it will be cheaper to operate a business. That makes it harder for Saskatchewan to attract new job creators.

Small businesses make up the backbone of the Saskatchewan economy. More than 31,000 businesses in the province will see their taxes go up in July due to this tax hike.

Small businesses employ almost 150,000 Saskatchewanians. Giving small businesses a hand is something that helps people in every single community in the province.

And if all that doesn’t convince the government to end the small business tax, maybe its own budget will. A low small business tax rate will “provide tax relief to key sectors of the provincial economy and help ensure tax competitiveness with similar businesses in other jurisdictions,” according to budget documents.

Small business owners create jobs and help grow the economy. The government needs to get rid of the small business tax for good.

Gage Haubrich is the prairie director for the Canadian Taxpayers Federation.