The government of Saskatchewan is raising taxes and cutting spending with a target of eliminating the deficit within three years
PST increasing to six per cent
The budget tabled Wednesday includes a one-point PST increase from five to six per cent, effective Thursday.
PST will now apply to purchases such as children’s clothing, restaurant meals and snack foods, insurance premiums and construction services.
The PST hike is expected to boost revenue by $242.1 million.
The tobacco tax will increase by two cents per cigarette beginning Thursday.
Starting April 1, wholesale liquor markups will increase by 6.8 per cent for most beer products, six per cent for most coolers and four per cent for most spirits.
PST exemptions are being eliminated. There will no longer be an exemption for bulk gasoline purchases, and the exemption for buying diesel fuel in bulk is being reduced to 80 per cent of purchases.
The exemption for used cars will continue, but the value of a trade-in will no longer be deductible when calculating the PST on the purchase of a new vehicle.
Tax changes expected to generate $900M
The education property tax is increasing. Personal income tax credits for education and tuition expenses are also being eliminated, along with the Employee Tool Tax Credit.
The corporation capital tax on large financial institutions is being increased, while the provincial income tax preference for credit unions is being phased out.
The annual Saskatchewan Low-Income Tax Credit will be increased by $100 per adult and $40 per child.
$711 per year cost for PST increase
According to the government, the PST increases would amount to $711 annually for a family of four earning $100,000, while the income tax reductions would total $2,662. A single person earning $40,000 would pay $130 more in PST annually, while income tax cuts would total $879.
No more Crown payments in lieu of taxes to municipalities
The budget also sees the discontinuation of SaskPower and SaskEnergy’s payments in lieu of taxes to municipalities, which currently total $36 million.
Revenue, spending both up
Revenue is expected to total $14.17 billion, up $141 million from last year’s budget. Spending is forecast to increase $342 million to $14.80 billion. Nearly three-quarters, or $10.7 billion, of the spending in this year’s budget is earmarked for health, education and social services.
Municipal revenue sharing is expected to total $258 million this fiscal year, and the funding formula will continue to be based on one point of the PST.
Infrastructure spending to total $3.7B
The province also plans to spend $3.7 billion on infrastructure, including $1 billion on highways and roads. Crown corporations – mainly SaskPower, SaskEnergy, SaskTel and SaskWater – will spend $2.1 billion on capital projects, while government ministries and agencies will invest $1.6 billion.
Return to balance in 2019
A deficit of $685 million is forecast for this year, followed by a smaller shortfall of $304 million in 2018-19. A $15-million surplus is projected in 2019-20 and a $183-million surplus in 2020-21.