Builders hopeful Sask. government will 'tinker' with PST on construction in upcoming budget

Builders are hopeful the Saskatchewan government will reverse the PST on construction in its March 18 budget, saying the tax has significantly reduced building investment.

The six per cent Provincial Sales Tax has applied to construction in Saskatchewan since April 1, 2017.

The decision, meant to help balance the budget in the face of low resource revenues, was controversial. Many in the building industry decried the policy, saying it was making their companies less competitive.

Mark Cooper, president of the Saskatchewan Construction Association, said he does not expect the tax to disappear but believes there could be changes in 2020.

"In the last year the government has begun to peel that tax back. They removed it from drilling and mining exploration," said Cooper. 

"They didn't remove the whole tax but they removed it on certain activities. I could see them choosing again to do the same thing. So maybe they would do it on new home construction for instance." 

Cooper also noted a request from the Saskatchewan Urban Municipalities Association (SUMA) to remove the tax on municipal projects. 

SUMA president Gordon Barnhart said the extra six per cent cost on construction must be raised by the municipality, even if the project is getting money from the federal or provincial government.

Cooper said this could be another change being considered by the province. 

"I could see them tinkering around the edges with [the PST on construction], and any relief would be welcome," Cooper said.

"I'm not expecting a full rollback but I will say we're the only province in Canada that taxes construction this way and that hurts our competitive environment."

He said the provincial government has not provided any indication that either of these changes are being considered. 

Chris Guérette, the CEO of the Saskatoon & Region Home Builders' Association, said the tax has dealt a severe blow to residential construction. 

She said the combination of the PST and the federal government's stress test on home loans, introduced in 2018, has made the market more difficult for homebuyers. 

According to a report compiled by the association, the number of building permits for single family residences in the Saskatoon and Prince Albert areas in 2019 was 26 per cent lower than 2018 and 39 per cent lower than 2017.  

"Clearly there is something going on in residential construction industries that is not allowing that market to reach its full potential and for people to really get into the housing industries," said Guérette.

She said the province is very aware of the industry's position on the tax and that her association meets with provincial officials monthly. 

She said her association is hopeful the upcoming budget will include changes. 

"We have been in conversations with our provincial governments for the past two years and trying to find a solution to the PST," said Guérette. 

"We're hopeful but, you know, we have to wait for budgets to see what's next."