Donna Harpauer says the decision to push provincial debt to record levels was the most difficult one she made while building the 2018-19 budget, which aims to cut $230 million off a $595 million deficit.
Debt increase most difficult budget decision, says Saskatchewan finance minister
Posted on April 20, 2018 in Business, In the Media
Saskatchewan’s finance minister says the decision to push provincial debt to record levels was the most difficult one she made while building the 2018-19 budget, which aims to cut $230 million off a $595 million deficit.
“The decision has to be: Do we do that, or do we find programs to cut?” Donna Harpauer said after delivering a Saskatoon-centric version of her budget address to a North Saskatoon Business Association lunch on Thursday.
“And we just chose to stay on track with providing the services, not making a bunch of program cuts, and positioning ourselves to balance — and then we should be able to deal with the fact that we did have to borrow some money for this budget.”
Saskatchewan NDP finance critic Cathy Sproule said the province’s rising debt levels are “unacceptable” and questioned whether the province has a plan to deal with its outstanding loans.
The 2018-19 budget includes $2.3 billion in new debt, which is expected to bring the total provincial debt to $20 billion by next year. Those loans are expected to cost taxpayers $654 million this year in interest and other debt charges.
Saskatchewan’s forecast debt equates to 15 per cent of its gross domestic product — the second-lowest among the 10 provinces. However, the total value of the outstanding loans is more than any government has had on the books before.
In her first public appearance in the city since delivering the budget almost two weeks ago, Harpauer also defended the government’s increased reliance on personal income and provincial sales taxes amid falling resource revenue.
The combination of those as a share of total revenue is 32 per cent in the 2018-19 budget, the same as last year but up from 29 per cent in 2016-17. Corporate income tax as a share of total revenue declined to four per cent from seven over the same period.
Harpauer also defended the government’s continued reliance on taxation — which the Sask. Party is committed by its guiding principles to reduce — in the face of weak natural resource revenue, which is largely responsible for the current deficit.
In the 2018-19 budget, personal income taxes account for 17 per cent of total revenue, corporate income taxes four per cent and provincial sales taxes — which are paid by individuals and companies — 15 per cent.
While personal income tax and corporate income tax revenue as a share of total revenue have fallen, those decreases are offset by a sharp increase in provincial sales tax revenue, which now accounts for 15 per cent of government income.
The provincial government also last year nixed a proposed plan to slash one point from the corporate tax rate.
“Of course, part of the principle of the Sask. Party — and the hope, and the goal — is to keep taxes low, for sure. But it is also to balance our budget and to balance our books and to live within our means,” Harpauer said.
“Sometimes, of course when you have a situation like we’re in, those can be a little bit conflicting (but) the lens I viewed this budget was really through the economy — what can we do to generate some revenue?”