The Saskatchewan Urban Municipalities Association (SUMA) is calling upon the provincial government to drop the PST charge for municipal construction projects. SUMA calls the tax counterproductive and unfair.
In 2017 the exemption of PST on construction projects was removed. Now, amid skyrocketing costs, the municipalities of Saskatchewan are sounding the alarm.
“Inflation and costs have increased drastically, straining the already limited budgets of Saskatchewan’s municipalities,” said Gerald Aalbers, vice-president of cities for SUMA and mayor of Lloydminster.
Municipal construction projects are funded through the Municipal Revenue Sharing program from the provincial government. The municipalities pay PST on those construction projects, which are funded by the provincial sales tax.
“We are trying to tell the government that they are actually taxing the tax money that they gave us in the first place. Our taxpayers are being taxed twice,” Aalbers said.
SUMA has new data to show that the PST is costing a significant portion of the total projects. Medium-sized cities in Saskatchewan returned 24 to 39 per cent of their total Municipal Revenue Sharing grant back to the province in the form of PST on construction projects in 2021.
For example, the City of Prince Albert paid a total of $2.8 million in PST, while receiving $7.1 million in grants from the government.
Aalbers said some important projects are being delayed because of the financial strain.
“If all the roads and water lines cost six per cent more, we will be building less roads and water lines. That doesn’t benefit Saskatchewan,” Aalbers said.
The Government of Saskatchewan replied in a statement to Global News, saying there has always been PST on material and supplies for infrastructure projects which can sometimes make up half of the project costs. The expansion in the 2017-18 budget expanded that PST to the total cost of the projects.
The government did not say if the topic would be discussed during the next budget talks.
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