Released on November 18, 2004
Saskatchewan's income tax brackets and tax credits will be fully indexed to the national rate of inflation, 1.7 per cent, in 2005."Indexation protects Saskatchewan residents from 'bracket creep' where income taxes increase and tax credits decrease as a result of inflation-based adjustments to personal income," Finance Minister Harry Van Mulligen said. "By indexing to the national rate of inflation, we are providing full inflation protection for Saskatchewan taxpayers saving them about $13.6 million in the 2005 tax year."
The income tax brackets, basic and spousal credits, senior supplement, dependent child credit, age credit, disability-related credits, medical expense credit, and the Saskatchewan Sales Tax Credit are all subject to indexation. In 2004, these components were automatically indexed to the national rate of inflation. In the 2004-05 Budget, the government announced that the indexation rate for each subsequent tax year would be determined each fall. This initiative was introduced to strike a balance between protecting taxpayers and managing the province's fiscal pressures.
"In light of this year's improved financial picture, and the fact we are able to absorb some of our pressures, we are pleased to be able to fully index personal income tax to inflation," Van Mulligen said. "Our goal is to provide meaningful tax relief to Saskatchewan people by keeping pace with inflation. However, I want to emphasize that we are not reinstating automatic indexation to inflation. Next year, we will re-evaluate the situation based on our financial picture at the time and the rate of inflation in 2005, and announce an appropriate indexation adjustment for the 2006 tax year."
The inflation-based indexation adjustment is determined from the annual change in the national Consumer Price Index. For the 2005 tax year, the indexation factor is 1.7 per cent.
"Our government remains committed to ensuring taxes in Saskatchewan are as fair and competitive as possible," Van Mulligen said. "Sensible tax reform helps to make living in the province more affordable and more attractive, while continuing to support the essential services our people value."
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For More Information, Contact:
| Debbie Clark Finance Regina Phone: (306) 787-8109 |