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38 Tax Memo 1 (1965)

handle is hein.journals/taxmmo38 and id is 1 raw text is: TAX MEMO No. 38 October, 1965 THE SASKATCHEWAN ROYAL COMMISSION ON TAXATION The Saskatchewan Royal Commission on Taxation is the fourth provincial tax study group to report its findings. The New Brunswick and Manitoba Commis- sions under Chairman Byrne and Michener reported in mid 1964 and their recommendations were sum- marized in the Foundation's Local Finance series. Nova Scotia's fiscal study released in 1964 was dis- cussed in the Canadian Tax Journal, Vol. XII, No. 6. (November-December 1964). This Tax Memo out- lines the main features of the 457-page Saskatchewan report released in July 1965. Highlights Two central conclusions of the Saskatchewan Commission emerge. A. There should be an upward shift of primary fiscal responsibility for education and other social services, from municipalities to the province rather than a down- ward shift of revenues from the province to municipali- ties through major extension of municipal tax powers or a system of provincial-municipal tax sharing. B. Provincial expenditures are likely to outpace the growth of provincial revenues. Since there are no handy new provincial tax sources of consequence wait- ing to be tapped, attention must be concentrated upon improving the yield from the existing provincial tax structure. Flowing from these central conclusions are a number of recommendations for increasing both local and provincial tax yields. These may be summarized briefly as follows. 1. There should be a revenue strengthening program for local government including a thorough revision of property assessment, elimination of all property tax exemptions, a new base for the municipal business tax and municipal assumption of the mineral acreage tax. 2. The retail sales tax base should be broadened by extending the tax to most intangibles and consumer services and by limiting major exemptions to food, health care and production machinery. 3. The gasoline tax should be increased by 2¢ a gallon; liquor prices should be increased by 5% and there should be an increase in vehicle licence fees and charges for the lease of Crown lands. 4. In the Commission's opinion, a sound case can be made for provinces asking the federal government to progressively withdraw from the sales tax field in order to leave more scope for the provinces in their taxation area. As for the effect of provincial taxation on econo- mic growth in Saskatchewan, the Commissioners report as follows: We could find little empirical evidence, and certainly there was no substantial argument brought before us, that provincial taxation policies and practices are more than marginal elements in the making of economic decisions that most affect our rate of growth and development. . . . Provincial tax policies are, at worst, a residual element in the picture, and the element least likely really to affect business decisions. To the extent that there was any professed concern in the discussions which took place before us of the impact of tax policies upon business decisions, comment was confined largely to taxes levied by the Government of Canada, in par- ticular the income taxes, personal and corporate. Additional copies of the Memo may be obtained at a price of 25d. © 1965 Canadian Tax Foundation TAX FOUNDATION CANADIAN

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