In late May a man called into a Brandon, Manitoba radio station and described how he regularly saw lots of Manitoba license plates in parking lots in Yorkton, Saskatchewan.
The gentleman shared his observation on the talk show as he was agreeing with the suggestion that increasing Manitoba’s provincial sales tax from 7 per cent to 8 per cent would only drive – pun intended – more people to shop in Saskatchewan; where the sales tax is only 5 per cent.
But not only will a sales tax increase encourage more people living in western Manitoba to shop over the border in Saskatchewan, it’ll push even more people to outright pack up and move there.
Don’t believe it?
Consider some Statistics Canada numbers dug up by the Canadian Taxpayers Federation, a donation-based taxpayers watchdog organization.
From 2002 to 2012, a whopping 21,132 Manitobans moved to Saskatchewan. Yet, over the same period only 19,335 people moved from Saskatchewan to Manitoba. Thus, Saskatchewan saw a net gain of almost 1,800 through the shuffling of feet between the two provinces.
In fact, if you dig into the numbers even further you’ll find Saskatchewan has really turned things around over the past decade. From 2002 to 2007, Saskatchewan saw 24,711 more people leave the province than the number that came to Saskatchewan from other provinces. This included a net loss of 22,261 people to Alberta.
However, during the last five years, 2007 to 2012, Saskatchewan has seen a net gain of over 12,698 people from other provinces. Incredibly, Saskatchewan has achieved this gain not just from Manitoba, but from Alberta and Ontario.
So what can Manitoba and Saskatchewan both learn about what’s going on? Loud and clear, the lesson is to be competitive.
Saskatchewan’s former NDP government deserves credit for rejigging resource royalty rates starting in 2002. In other words, the government was charging businesses too much money for pulling materials out of the ground (eg. oil, potash, etc.) so there simply wasn’t as much business activity in the province as there could have been.
Once the new competitive rates were announced, investment dollars flowed into the province by the billion. Literally thousands of jobs were created and the economy really took off.
Since then, under both the NDP and Saskatchewan Party, the Saskatchewan government has reduced business taxes, personal income taxes, the provincial sales tax and school taxes. As each rate became more competitive, taxpayers saved more and more money and they were able to use the savings to support local businesses. Others took their savings and used it to start their own companies; further spurring economic growth and creating jobs.
And particularly, with the business tax (which fell from 17 to 12 per cent), the government didn’t lose any money. In fact, business tax revenues have increased by more than 600 per cent over the past decade.
Conversely, Manitoba hasn’t seen the same transformational change. No, it has slowly let Manitobans drift into a situation where they’re paying some of the highest personal income taxes in Canada, the province’s mining taxes are high and of course, the sales tax is set to increase.
Just as people shop around for better deals, governments need to realize the public, and businesses, will also shop around if governments aren’t competitive.
The Saskatchewan government needs to continue to aim to be even more competitive, while the Manitoba government needs to get in the game. Until then, we’ll see more Manitoba license plates leaving the province and not turning back.
Colin Craig is the Prairie Director for the Canadian Taxpayers Federation.