Saskatchewan Budget 2017: sales tax increasing to deal with $685M deficit

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Saskatchewan Budget 2017: sales tax increasing to deal with $685M deficit
WATCH ABOVE: The biggest hit for the average family in the Saskatchewan budget will be a one per cent increase to the PST. The province expects that will bring in an additional $242 million. This is just one part of a three year plan to return to a balance – Mar 22, 2017

The Saskatchewan government is increasing the provincial sales tax (PST) to deal with a deficit forecast at $685 million as the province looks to return to a balanced budget in three years.

Saskatchewan Finance Minister Kevin Doherty said his 2017-18 budget aims to control spending while modernizing and expanding the tax base.

WATCH BELOW: The PST rate is now six per cent, up from five per cent and the PST is now applied to more things. To break down what that means for you at home, we’re joined by Blake Lough.
Click to play video: 'How PST and income tax changes will affect Saskatchewan'
How PST and income tax changes will affect Saskatchewan

Doherty said the changes had to be made to deal with a decline of over one-billion dollars in resource revenue that he said depleted reserves and the rainy day fund.

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“We need to move away from our level of reliance on revenue resources while at the same time ensuring important government programs and services are affordable and sustainable in the long run,” Doherty said in a statement.

The Opposition NDP called the budget an attack on families in the province.

“Every page of this budget shows another broken promise, a tax hike, or a cut to Saskatchewan families trying to get ahead,” NDP finance critic Cathy Sproule said in a statement.

“The Sask. Party arrogantly and recklessly spent the people of Saskatchewan’s money, and now it’s those people – those families and those workers – that are being forced to pay for the government’s mismanagement, scandal, and waste.”

READ MORE: How PST and income tax changes will affect Saskatchewan

The PST is increasing one percentage point to six per cent effective March 23, 2017.

PST is being expanded to apply to children’s clothing, restaurant meals, insurance premiums, construction services and permanently mounted equipment in the resource sector.

The increase and expansion of the PST is expected to raise an additional $242.1 million in revenue.

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A number of exemptions are also being eliminated, however, Doherty said personal and corporate income tax rates are being lowered.

“Every Saskatchewan taxpayer at every income level will see a decrease in their income taxes, and those whose income is too low to pay income tax will see an increase in the Saskatchewan Low-Income Tax Credit they receive,” Doherty said.

The low-income tax credit will be enhanced by $100 per adult and $40 per child.

Doherty estimates the tax changes will add $900 million to the government’s coffers.

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Part of the estimated $685 million deficit is made up of a $300 million contingency to protect against revenue decline and unforeseen costs for natural disasters including flooding and forest fires.

Doherty is forecasting a deficit of $304 million in 2018-19 before returning to a balanced budget in 2019-20 with a surplus of $15 million.

The government said the budget includes a $250 million reduction in public service compensation including a 3.5 per cent wage rollback for ministers and members of the legislative assembly.

Overall, total revenue is forecast at $14.17 billion in 2017-18, with spending estimated at $14.8 billion.

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READ MORE: 2nd largest transportation budget totals $1.1B for Saskatchewan highways

Three-quarters of that spending will go to three areas – health, education, and social services and assistance.

Total health spending is forecast to rise 0.7 per cent to $5.63 billion while social services and assistance spending will increase 9.1 per cent to $1.4 billion.

Education spending will decrease 1.2 per cent to $3.6 billion.

The government announced changes to the Education Property Tax mill rate, which is increasing to provide 40 per cent of funding for K-12 education.

Spending is also being eliminated or reduced in some areas.

READ MORE: Saskatchewan Transportation Company to cease operations

Subsidies to the Saskatchewan Transportation Company are being eliminated and the bus service will stop running at the end of May, affecting 224 employees.

Doherty said declining ridership led to the decision.

“STC has become unsustainable without subsidies, and that money would be better spent on other areas such as health care, education and infrastructure,” he said.

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Sproule said this is a reversal from what the government said a year ago.

“Less than a year ago, the then minister responsible said STC is a ‘needed service’ and was safe from a sale,” Sproule said.

“STC provides a vital service to many seniors, workers, and families throughout the province and, by scrapping it out of the blue and without asking permission of the owners – the Saskatchewan people – the Sask. Party is sending a clear sign, how little they care about protecting our Crowns like SaskTel.”

SaskPower and SaskEnergy payments to municipalities in lieu of taxes are being discontinued, resulting in the government retaining $36 million. Doherty said measures are being taken to mitigate the damage to Regina, which will be impacted the most by the change.

READ MORE: Sask. government selling provincial railcars

The government is also ending the Saskatchewan Pastures Program, selling off its 900 grain cars and suspending the First Home Plan for recent graduates.

Starting July 1, the Ministry of Social Services will only be paying for basic burial or cremation services for people on income assistance. In the past, the province would pay for funeral services or viewing for anyone of the Saskatchewan Assistance Program or Saskatchewan Assured Income for Disability programs.

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Funeral costs will now be the responsibility of the person’s family. The change is expected to save $1 million in 2017-18. Around 400 people per year use the benefit.

Post-secondary institutions will receive less operational funding and funding to a number of training and skills programs is being reduced.

The cost of cigarettes and alcohol are going up.

The Tobacco Tax will increase by two cents per cigarette at midnight Wednesday, which is expected to generate $10 million in revenue.

Most beer products are going up 6.8 per cent, coolers six per cent, wine 5.3 per cent and four per cent for most spirits.

The wholesale liquor mark-ups take effect April 1, 2017 and are expected to raise $5 million.

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