Sask NDP, municipalities want province to scrap PST on construction projects

Saskatchewan municipalities and the NDP Opposition have asked the province to scrap its PST on construction projects. They assert it has stalled economic activity when Saskatchewan should be booming.

Saskatchewan Premier Scott Moe lauded the growth of his province's economy, citing its low unemployment rate, more exports, building permit values and retail trade, and confirmed potash and agriculture projects.

However, the NDP argues Saskatchewan's economy isn't doing as hot as the governing party has said. 

Party leader Carla Beck declared the province is at the bottom in employment and GDP growth and claimed the average building permit values are down compared to other provinces.

NDP infrastructure critic Trent Wotherspoon and Beck conveyed the PST increased project costs, contributed to delays, and raised municipality taxes.

"It also makes us not competitive with jurisdictions like Alberta," said Beck. "As Trent said, this province should be booming."

Alberta is introducing a new agri-processing tax credit that the government claims will maintain the province's competitive advantage, increase investment, and further diversify the economy.

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"When you look at our natural resources and potash, those capital dollars are crucial. And they will go elsewhere if we're not competitive."

In 2017, the Saskatchewan Party introduced a PST on construction and other service contracts to help balance the budget, projecting an additional $325 million in revenue.

Municipalities, contractors and homebuilder groups slammed the move and have asked the government to scrap the "draconian" money grab.

In 2021, the City of Yorkton paid nearly $1 million in PST on infrastructure projects, whereas Prince Albert paid $2.8 million.

Wotherspoon said removing the tax would be one measure to help economic activity increase. He said forgoing the PST would be offset by more people working and moving to the province.

The Saskatchewan Urban Municipalities Association (SUMA) added that not having a PST on construction would better allocate spending dollars.

Premier Scott Moe expressed his disappointment with not being informed of the Prime Minister's visit. "It's disappointing because this is an area that the provincial and federal governments see eye to eye on," he said.

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According to SUMA president Randy Goulden, the province could have used those dollars to build a new recreation facility or upgrade critical infrastructure like roads.

"What would be beneficial is for these dollars to go to other things necessary for the community," said Goulden. "We appreciate the revenue sharing, but we're very concerned about the PST on construction."

A study by the association found medium-sized cities have returned up to 39% of their total municipal revenue sharing grant to the province through PST on construction projects.

The Saskatchewan Association of Rural Municipalities has also asked the government to remove the PST on construction contracts because it increased costs.

Kevin Dureau, the CEO of the Saskatchewan Construction Association, echoed the need to remove the PST to help with competitiveness but added that the carbon tax, inflation and supply chain issues have also caused strains.

Beck described the measure as a "gut punch to growth."

Prime Minister Justin Trudeau is receiving more pushback from his visit to Saskatchewan on Monday after the province's Indigenous peoples uncovered partial remains at a former residential school.

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"If you ask me, if you ask business leaders and municipal leaders, this is a government that seems more interested in flashy headlines than investing in our communities," she said.

Premier Scott Moe's spokesperson claimed the PST funds programs which benefit municipalities through revenue sharing.

The spokesperson added the province needs to be "mindful in not creating an unsustainable expense base because we know resource revenue can be volatile."

Wotherspoon criticized adding the PST to construction labour as a "mistake from day one...the epitome of a job-killing tax that stuck our economy in the ditch."

"We need to get back to common sense in this province," said Beck, adding that the government needs to listen to local industry and municipal leaders.