Construction firms seek tax holiday

Two thirds of companies have already laid off workers, more expect to follow

COVID-19 has changed the way Ryan Leech’s company works.

He owns Brxton Masonry, a commercial and industrial masonry contractor.

To keep his workers safe from infection, he’s imposed policies for daily cleaning of equipment, trailers, lunch facilities and vehicles. Employees are constantly hand sanitizing.

Meetings that used to be face to face are now happening in the virtual world, creating “communication breakdowns” that slow down work.

“We have no idea how long we’re able to continue working in the inefficient manner that we are,” he said.

That means higher costs. At the same time, contracts are drying up. Leech just lost a contract on Tuesday, and expects to get a lot more emails cancelling projects in the days ahead.

He’s convinced he’ll have no problem demonstrating the 30-per-cent revenue decline the federal government is asking for to grant 75-per-cent wage subsidies. That will help.

But it might not be enough. Caught between the vice of higher costs and lower revenues, construction companies are pushing the provincial government to grant tax holidays as they struggle with cash flow and fear bankruptcy.

Mark Cooper, president of the

Saskatchewan Construction Association, said the COVID-19 pandemic is another hit to an already-beleaguered industry. He called the situation “bleak.”

A recent survey he sent out to members showed that 53 are already in moderate to severe financial distress, and fully 92 per cent expect to be there within three months if things don’t change. Almost two-thirds have already laid off workers as a result of the pandemic.

SCA members report shuttered suppliers, customers cancelling jobs and shortages of protective equipment also coveted by health care workers.

So far, the province has granted tax and utility deferrals to help take the pressure off business. But Cooper called that “a really bad plan.”

“Deferrals kick the can down the road and hit businesses just as they’re trying to scale up to grow in a time of economic resurgence,” he told Postmedia.

“Given the choice, most businesses will just choose to shut down.”

The Canadian Federation of Independent Business (CFIB) issued a similar warning this week.

It released survey results Tuesday suggesting that almost half of businesses now closed because of COVID -19 fear that they’ll have to stay closed — permanently — because of the economic toll of the virus.

Forty-four per cent of those surveyed in Saskatchewan said they’re unsure if they’ll be able to reopen.

Both CFIB and Cooper welcomed the federal wage subsidies.

But Cooper questioned the requirement that companies prove a 30-per-cent revenue loss, since construction company revenues can vary widely from year to year, and are well below where they were during the boom years before 2015.

“With an economy that has been challenged over the last few years, I think a lot of companies have run through some of their financial runway,” Cooper said.

“So the challenge there is they just don’t have the capacity to absorb loss of revenue. So that’s what we’ve been hearing from people.”

Cooper called on the provincial government to come to the rescue with a six-month holiday on sales and income taxes, as well as measures to ensure mortgage, lease and loan relief. The CFIB made similar requests.

The provincial government said it continues to talk with the business community about how it can help, and is committed to ensuring support. It pointed to its new Business Response Team and tax deferrals.

Still, Leech noted, deferred bills will still come due someday.

But in a statement, spokesman James Parker noted that the government will “work with businesses to establish payment arrangements that allow them to pay the amounts back over a period of time.”

Parker also highlighted the government’s $2.7 billion in infrastructure spending for the 202021 fiscal year, which he said “will mean construction jobs.”

“Certainly there is more to be done, certainly as has always been our position eliminating the carbon tax and providing more federal support to our resource industry would be good steps,” he said in the statement.

The federal carbon tax leaped up by another $10 per tonne on Wednesday, reaching $30 per tonne of greenhouse gas emissions.

CFIB criticized the move alongside its call for tax holidays.

Cooper argued that more help is needed soon.

Without a big support package, he thinks bankruptcies are sure to follow.

“If our businesses are not rescued in the next few days by considerable government action, they may not be there when we need them,” Cooper added.

We have no idea how long we’re able to continue working in the inefficient manner that we are.