JSGS faculty awarded funding for project aimed at improving investment and economic development in Saskatoon

Thanks to Research Junction—an innovative partnership between the City of Saskatoon and the University of Saskatchewan (USask)—faculty members in the Johnson Shoyama Graduate School of Public Policy (JSGS) were awarded $15,000 in funding for a new research project that will benefit Saskatoon residents. In total, Research Junction awarded $100,000 in funding to four USask projects that apply advanced research methods to addressing current issues in the city. 

Led by Dr. Haizhen Mou (PhD), JSGS professor, and Dr. Yang Yang (PhD), JSGS lecturer, the Strategic Allocation of Business Tax Incentives project will provide city administrators with a comparison of business tax incentives and subsidies in major Canadian cities and their impacts on local employment, income, and economic growth. Working with Mike Jordan, chief public policy and government relations officer at the City of Saskatoon, the research team will identify the best ways to encourage investment in Saskatoon in terms of attracting new business and promoting expansion for existing firms.

Cities offer various subsidies to businesses and organizations to encourage investments, either by attracting new businesses from other jurisdictions or by promoting expansion for existing firms. Business tax incentives are typically used in times of both low and high economic growth and are often used as a job creation tool regardless of whether the labour market is tight or not. Examples of tax incentives meant to encourage economic development in Saskatoon include the city’s Business Incentives Policy and its Vacant Land and Adaptive Reuse Policy. According to Saskatoon’s 2020 budget, approximately $2.4 million in annual economic development incentives were allotted to eligible businesses—an equivalent of a 1.0% property tax increase. However, are these subsidies achieving the city’s desired outcome?

“As part of our research, we will review the tax expenditures for the manufacturing industry in Saskatoon and in competitor cities across Canada. Using data from Statistics Canada’s Government Finance Statistics, city budgets and tax documents, and city annual financial reports, we will be able to determine Saskatoon’s overall tax competitiveness,” says Mou.

Mou and Yang believe that their research will fill a gap here in Canada.

“Vast amounts of comparable data business tax incentives at the state and local levels are available in the United States, but not much is available within a Canadian context.”

Based on their scan of business tax incentive programs in major Canadian cities, Mou and Yang will look at the economic consequences of Saskatoon’s business tax incentives —including labour market outcomes in the mining sector and other spillover sectors, firm relocation and expansions, and impacts on workers’ wages, personal income and local GDP. Their assessment will provide insight into the direct and indirect effects of business tax policies on local employment, income, economic growth, and equity.

In consultation with economic development agencies and related organizations, Mou and Yang will propose economic criteria for decision-making when allocating and utilizing business tax incentives for the City of Saskatoon.

"Our policy framework, which aligns tax programs with policy objectives and involves rigorous economic evaluations, will help the city prioritize funding and improve its cost-effectiveness, transparency and accountability,” says Mou.

Click here for information on the other three projects funded by Research Junction.