During Wednesday’s provincial budget reveal, Saskatchewan gyms and events learned that their customers will now pay a 6 per cent provincial sales tax on admission and memberships.
“I was a little bit shocked from it,” said Justin Mondor, the owner of Brickhouse Gym in Regina.
But as of July, the small business tax which was dropped in October of 2020 will also now return at a rate of 1 per cent. Before the tax was cut early in the COVID-19 pandemic it sat at a rate of 2 per cent. It’s a move the government says provides $51.5 million in savings to Saskatchewan’s small businesses.
Yet small business owners aren’t exactly focused on the supposed savings.
“A lot of our members are small business owners too so if they’re struggling in their business they might need to reduce expenses. I mean that’s what people have been doing all through COVID,” said Mondor.
“When finances become an issue they chop off whatever they can. Unfortunately a gym membership is usually one of the first things that goes.”
According to the Canadian Federation of Independent Business (CFIB) the average Saskatchewan small business has accumulated $95,188 in COVID-19-related debt.
These tax changes now add to inflation and supply chain issues that businesses were already dealing with in their attempt to recover from the pandemic.
“The timing could literally not be any worse at all. Everyone is just trying to get back to work get working and make some money but now all these added fees are going to start adding up. The price of gas … on top of it,” said Mondor.
“Sixty per cent of Saskatchewan small businesses do report that one of the reasons they have not returned to normal sales is because customers are slow to return,” said CFIB Saskatchewan Provincial Affairs Director, Annie Dormuth.
“So adding an additional 6 per cent tax right now at a time when everything is more costly could have the impacts of deterring customers and consumers away from these activities that definitely need our support now more than ever.”
At a time when gyms expect registration to peak with summer approaching, owners are worried about losing customers.
”You kind of always want to hope that there’s encouragement to get active into fitness and now we have something that’s going to be an external discouragement of joining a gym or continuing on at a gym,” said Mondor.
”Governments should be doing all that they can to encourage consumers to go to the gym that has been closed for some parts of two years here, to return to these in person events, but instead it’s making it more costly for consumers,” said Dormuth.
The government says the reason for the tax is to help with the backlog of surgeries needed in the health-care system.
“If I said to a Saskatchewan resident… would you be willing to pay this for the two concerts and the Rider ticket in order for us to address the very critical surgical wait-list,” said Finance Minister Donna Harpauer, “because we all know someone — if we’re not that someone, we know someone in our family that their quality of life isn’t what it should be because they need a knee or hip replacement — I think Saskatchewan people would support that.”
Some suggest a tax benefit for those making an effort to better their physical and mental health which could aid the health-care system.
“If anything, it would be nice to see some sort of tax benefit where we could claim this back on our year-end filings for income tax instead of now incurring another fee,” said Mondor.
The new form of PST comes into effect in October.