Ontario Construction News staff writer
Saskatchewan’s Opposition leader is calling for an end to the PST on construction labour, but one organization said there are more pieces to the puzzle.
NDP leader Carla Beck called for the axing of the tax on Thursday in the legislature, saying it causes municipalities to raise property taxes in order to pay for infrastructure projects.
“It has slowed growth, it has stopped growth and delayed projects in many instances,” Beck said. “This is a consistent message we’ve heard from municipal leaders that this tax is leaving us with projects that are too expensive and it’s making us not competitive. It needs to be removed.”
As municipalities finalize their municipal budgets and prepare for the 2023 construction season, Saskatchewan’s hometowns are continuing to feel the pinch of PST on municipal construction projects. Cities are paying millions of dollars in PST on infrastructure projects designed to improve the quality of life for their residents and surrounding areas.
“Local governments are responsible for approximately 60 per cent of public infrastructure,” said Mayor Gerald Aalbers, chair of the Saskatchewan Urban Municipalities Association (SUMA). “Our hometowns largely build and maintain that infrastructure through government grants like the Municipal Revenue Sharing program. But one-quarter or more of our Municipal Revenue Sharing dollars are being returned to the province in the form of PST on construction projects.”
Based on data gathered by SUMA, medium-sized cities in Saskatchewan returned 24-39 per cent of their total municipal revenue sharing grant back to the province in the form of PST on construction projects in 2021. The City of Yorkton paid about $1 million in PST on their infrastructure projects, and for the City of Prince Albert, the total was $2.8 million. The cities received $3.2 million and $ 7.1 million from municipal revenue sharing.
When the exemption of PST on construction projects was removed in 2017, Saskatchewan’s hometowns raised concerns over the additional costs, requesting an exemption. With inflation, costs have increased drastically, further impacting the already limited budgets of Saskatchewan’s municipalities.
For those cities undertaking major infrastructure projects, like the percentage of funding returned to the province through PST on construction projects is anticipated to rise substantially.
“We truly appreciate the funding provided to our communities through programs like municipal revenue sharing,” Aalbers said. “But we are returning a significant portion of this funding through PST on municipal construction, funding that could instead be used to enhance municipal services and limit property tax increases.”