Higher Saskatchewan sales tax in budget that eats away at deficit
Premier Wall says the three-year plan has a specific date to get back to a balanced budget and help move away from a dependency on resource revenue
REGINA—Saskatchewan residents will have to dig deeper into their pockets for everything from alcohol to home renovations as the government increases the provincial sales tax to help tackle a $1.3-billion deficit.
The budget tabled Wednesday raises the PST to six per cent from five and applies the tax to things that were previously exempt, such as children’s clothing and restaurant meals.
“We need the revenue,” Saskatchewan Finance Minister Kevin Doherty said of the PST increase.
“All the changes that we’re making with respect to the shift from tax on income and productivity to consumption taxes is based on our government’s intention to get off such a heavy reliance on resource revenues.”
“I acknowledge it will put some pressure on families,” he added.
The Saskatchewan government is facing a $1.3-billion deficit in the fiscal year just ending, and hopes to bring it down to $685 million in the year ahead. The plan is to balance the budget in three years.
The government’s problem is a big drop in revenue from oil and gas, potash and uranium. Tax revenue was also lower than forecast and crop insurance claims were up.
Doherty says personal income and corporate taxes are being cut to spur economic growth.
But the Opposition NDP said the budget is an attack on families.
“I think they’re going to say, ‘Ow.’ That’s what average families are going to say,” said NDP finance critic Cathy Sproule.
“Even if you want to do renovations to your homes, now that’s going to be another five per cent PST because that exemption’s gone. Children’s clothing … that’s an important reduction or exemption for families.
“There’s a number of things in here that are going to hit families really hard.”
Tobacco and alcohol taxes are also going up.
The provincially owned bus company will be shut down, putting 224 people out of a job. The government says it would have cost $85 million to keep the Saskatchewan Transportation Company, known as STC, running for the next five years.
“Everything that they possibly could do to improve their revenue base and to get ridership up just did not work,” said Doherty.
The head of the Saskatchewan Association of Rural Municipalities says losing the bus company is worrisome.
President Ray Orb says it’s a valuable service, especially for smaller communities and seniors.
“For a lot of people, it perhaps might be going to the doctor. It might be somebody from Weyburn that wants to go to the doctor in Regina and can actually get a trip back the same day,” said Orb.
“It means for some people, some businesses, being able to send freight from community to community, and agriculture parts, things like that, and I think it’s quite important.”
Funding is also being cut by five per cent for post-secondary schools to save $30 million.
University of Regina president Vianne Timmons says they expected a reduction. But the amount is a shock and it will “be felt deeply on our campus by all,” she said.
“We don’t absorb it. There’s no way we can absorb it, so we will have to look at positions, we will have to look at everything we do,” said Timmons.
Public-sector compensation, such as wages and benefits, are also to be reduced by 3.5 per cent, although Premier Brad Wall has said he won’t dictate how that is to be achieved.
Wall says there were difficult decisions in the budget, and he’s not surprised that some people aren’t pleased.
But the premier says he’s happy with it “because it takes a longer view than any other budget we’ve ever tabled.”
“It does what governments should have been doing for a long time in Saskatchewan, including ours, starting to move away from resource revenue,” said Wall.
“I don’t think that revenue’s coming back any time soon. Now’s the chance that we have, the opportunity we have to move away from that dependency.”