SUMA says cities, towns and villages are paying millions in provincial sales tax on municipal construction projects. File photo/paNOW staff. 

By Doug Lett

SUMA and PST

Cities and towns want PST dropped on construction projects

Feb 11, 2023 | 8:00 AM

Cities in Saskatchewan are crying foul over the PST. On Friday SUMA (Saskatchewan Urban Municipalities Association) issued a news release saying cities, towns, and villages are paying the province millions of dollars in provincial sales tax on construction projects.

“One-quarter or more of our municipal revenue sharing dollars are being returned to the province in the form of PST on construction projects,” said Lloydminster Mayor Gerald Aalbers, who chairs SUMA’s City Mayors Caucus.

“Call it a clawback, it’s challenging,” added Aalbers, before stating that because municipal projects are usually quite expensive, the amount of tax that communities have to fork over can be significant.

SUMA used the example of Prince Albert, pointing out that while the city received $7.1 million from the province in municipal revenue sharing in 2021- they had to pay the province $2.8 million in PST on construction projects.

“So as municipal leaders, we’re trying to balance a budget,” said Aalbers. “And then on top of this, there’s a taxation factor that really causes a lot of stress…because either we don’t provide the project that was originally proposed because we can’t afford it, or it causes additional tax at the local municipal level.”

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Aalbers said the call for the exemption came out of a meeting of the SUMA City Mayors Caucus on Thursday. But he added it’s affecting all municipalities.

“That’s what we’re hearing from across the board, doesn’t matter if you go from Estevan to Swift Current to Prince Albert,” he said. “Across the entire province, this plays a huge factor.”

In a statement, the provincial government argued the PST helps pay for everything from health care to education and protective services. The statement adds the province has significantly raised the amount of money in revenue sharing that municipalities receive.

In addition, the statement stated there has always been PST on material and supplies for infrastructure projects. The province added the PST to the total cost of projects in the 2017-18 budget.

SUMA is asking the provincial government to drop the PST on municipal projects in the upcoming provincial budget, which is scheduled to come out on March 22.

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doug.lett@pattisonmedia.com

Twitter: @DougLettSK