A million dollar construction contract would result in a $60,000 PST charge in Saskatchewan. That comes after the province added the tax to construction contracts in the 2017 budget.
Now, the Opposition NDP are blaming the tax for a decline in value of Saskatchewan’s construction permits.
“That PST just priced a lot of people out of projects that they would have liked to have been involved in,” NDP Leader Ryan Meili said.
“It’s been a big factor in putting a lot of people out of work in construction and associated trades. So, I think we’re probably losing money as a government because we have that PST.”
The NDP are using Statistics Canada data to back up their argument.
The Stats Canada report, released Wednesday, examined provincial building permit values in August 2017 and August 2018. Overall, the value of building permits in Saskatchewan fell by 32.9 per cent.
Meili added that with the amount of construction commissioned by municipal governments, adding the PST to these projects amounts to one level of government taxing another.
Residential building permits went from $87.9 million to $62 million, a 29.5 per cent decrease, and non-residential dropped from $104.5 to $67.2 million, a 35.7 per cent drop.
“Way less building is going on here in the province and it’s indicative of the larger picture of what’s going on in the broader economy,” Meili said.
The provincial government also links a slow economy, particularly a slowdown in the resource sector, to the construction slowdown.
While August was a particularly slow month, Saskatchewan Construction Association (SCA) president and CEO Mark Cooper said the decline for permit values for all of 2018 is around seven per cent compared to 2018. That comes after 2017 saw an eight per cent increase in value over 2016.
“What we’re looking at, at this point this year, is where we were two years ago. I think it’s important to have that kind of context when looking at the numbers,” Cooper said.
“The PST on construction is something that makes Saskatchewan less competitive when attracting investment and that’s not good for the economy.”
Cooper added the SCA has been relaying their concerns about the PST to the province and they’re starting to see evidence. This includes the cancellation of a condo complex in Prince Albert attributed to the PST and delays in small town care homes.
“It’s not just one factor that contributes to that. There is a general lack of confidence – I think – still in the economy; both in terms of small business, the public and just waiting for that growth to happen,” Cooper said.
He added that removing the PST on construction could help restore some of that investor confidence.
In a statement, the province said there are signs the economy is continuing to show economic recovery such as August 2018 exports being 29.1 per cent higher than in August 2017.