PST rollbacks not enough: NDP
Moe lifts tax on some insurance but not kids’ clothes, construction
While removal of the provincial sales tax (PST) on agriculture, life and health insurance is winning praise from those in the industry, the NDP Opposition is wondering why the government rollback didn’t go further.
The PST on property, vehicles, restaurant meals and children’s clothing still remains, despite the changes announced by the Saskatchewan Party government on Monday.
Premier Scott Moe announced the PST exemption will be reinstated for individual and group life and health insurance premiums, which includes disability, accident and sickness insurance. The exemption is retroactive to Aug. 1, the date PST was applied to insurance.
“We’ve heard from those in the industry, from families across the province and we’ve heard from employers across the province that this is something that’s important to them and important to the economy of the province,” Moe told reporters at a new conference.
The exemption also covers agriculture, which includes crop, livestock and hail insurance premiums.
“This was a commitment that was made throughout the leadership campaign and something that we heard throughout that campaign,” Moe said.
When asked why vehicle and property insurance premiums aren’t exempt from the PST, Moe said: “We’ve been asked that question across the province, and there will be more details to come as we lead into the April 10th budget for next year.”
The changes are good news for insurance clients, said Abe Toews, a chartered financial consultant with Beyond Wealth Management in Regina.
Toews belongs to Advocis — the Financial Advisors Association of Canada.
A poll done for Advocis following the implementation of the PST on premiums showed that 53 per cent of Saskatchewan residents felt the province was headed in the wrong direction and 73 per cent opposed the tax.
The survey also revealed the PST had many Saskatchewan consumers considering a reduction in their life and health insurance coverage, or cancelling their policies altogether.
Advocis engaged in a campaign to inform the public on the detrimental impacts of applying PST on insurance, and Saskatchewan members lobbied the provincial government to reinstate the PST exemption on life and health insurance.
“There were a lot of members within Saskatchewan that had conversations with their cabinet ministers and MLAs to express concern that this tax was going to limit some people’s ability to provide insurance for their families,” Toews said.
He noted clients buy insurance to protect their families and their businesses.
“It was a tax on protection really, and if you had a whole life policy, then it was also a tax on the savings portion of an insurance policy as well,” Toews said. “It was really taxing savings.”
NDP interim leader Nicole Sarauer said if the Sask. Party had truly listened to Saskatchewan people and business, the PST exemption would have included house and car insurance, children’s clothing, restaurant meals and construction.
Restaurants and construction “are taking a huge hit and are actually experiencing a slowdown as a result of the PST,” she said.
“I can’t even keep track anymore of how many rollbacks and how many changed plans we’ve seen since this last budget,” Sarauer said. “It’s clear they didn’t consult and all
It was a tax on protection really, and if you had a whole life policy, then it was also a tax on the savings portion of an insurance policy as well.
of these have costs as well. Not just to government, but to business for implementing these and then rolling them back.”
The change will have a $65 million impact on revenue forecast for 2017-18.
For 2018-19, the revenue impact of Monday’s announcement is $120 million in forecasted agriculture, life and health PST revenue, of total PST from insurance premiums forecast of $240 million.
But despite PST changes, Moe maintains the province remains on track in its three-year plan to balance the budget.
The Ministry of Finance will work with the insurance industry to determine the best way to refund individuals and businesses that have paid PST on agriculture, life and health insurance premiums.
More information about how the refunds will be administered will be available before the provincial budget is released April 10.
Finance Minister Donna Harpauer said the third-quarter report to be released on Friday will demonstrate how the government will manage the decrease in revenue.
In preparing the next budget, Harpauer said: “We know we need to find an additional $120 million moving forward to address the reinstatement of PST.”