Seventy-nine per cent of Canadian Federation of Independent Business (CFIB) members in Saskatchewan say the recent provincial budget will hurt their competitiveness.
“It has just made it tougher for businesses to grow in Saskatchewan. It is going to have a ripple effect,” CFIB Prairie and agri-business vice president Marilyn Braun-Pollon said.
The budget includes $908 million in new taxes, including a one point PST increase to 6 per cent and the elimination of several exemptions.
“The number one impact is lowering their customer’s purchasing power. It’ll raise their input costs, it’ll raise product prices,” Braun-Pollon said.
Other concerns from business include pressure to freeze salaries (28 per cent), put hiring plans on hold (23 per cent), and cut back on employees (12 per cent).
READ MORE: 17 per cent of Sask. small businesses eyeing layoffs: report
Finance Minister Kevin Doherty and other members of cabinet have said that the increase in consumption tax will be offset by a drop in corporate and personal income tax.
Fifty-six per cent of small businesses say the personal income tax reduction will be a positive. On the corporate side, it’s 46 per cent. However, 33 per cent say it does not apply because they do not meet the business income threshold of $500,000 annually.
The CFIB survey said some of the hardest hit sectors are construction and hospitality, two areas that previous enjoyed PST exemptions.
Bushwakker Brew Pub bar and marketing manager Grant Frew said that he and his staff were anticipating a rough April.
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“When the announcement was first made in late March, a number of our customers were commenting about this increased cost that they’re coming to have to pay on restaurant meals, but it’s just too soon to tell,” Frew said.
Frew said day-to-day business has been a mixed bag; some traditionally busy nights haven’t been and vice-versa.
Bushwakker has been operating for 26 years, and Frew said in that time the bar has seen all sorts of ups and downs. This tax shift is just another change to adapt to.
“It’s a little bit of an inconvenience. People definitely aren’t happy about it, but if we continue focusing, but if we keep focusing on good quality product we’re going to get through this,” Frew said.
As for construction, business commentator Paul Martin said that anytime you introduce a significant tax changes, such as charging PST for materials and labour, it will create a disruption in the market.
“It’s great for the government I guess because it will raise that capital, but how many people are going to make decisions not to go ahead as a consequence? That’s what the business people are telling me.”
Martin added that this is an adjustment period. People will protest now, but will eventually get used to paying more. He said in the long run the tax shift can potentially benefit Saskatchewan.
“They put more emphasis on consumption tax, they lowered the income tax. When this is all done Saskatchewan may well be the lowest income tax jurisdiction in the country, or certainly one of the lowest,” he said.
“That’s an incentive for people to invest here, to come here, and when you see the premier aggressively trying to recruit companies… this is all about getting the growth agenda back on its feet.”
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