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Editorial: The government gives, and then takes away

The province should exempt municipalities from paying the PST on major municipal projects, says Weyburn Review editor Greg Nikkel in his editorial.
Finance minister-1238
Donna Harpauer, Finance minister, and her government should consider exempting municipalities from paying PST on major municipal projects, says editor Greg Nikkel.

There’s an old saying about “robbing Peter to pay Paul” which seems to apply to municipalities in Saskatchewan these days.

In the case of municipalities, in particular urban municipalities like the City of Weyburn, they have raised an issue  with the provincial government in regards to revenue sharing grants, infrastructure grants, and the application of the provincial sales tax on municipal projects.

Does it not seem ludicrous to base an important grant that all municipalities, small and large, rural and urban, need, namely the revenue-sharing grant, on the sales tax, but to then take back a large part of that grant through the very same sales tax?

How is it nobody in government seems to even notice this is happening? Or if they do, they don’t seem to care that it’s happening.

The system has been in place for many years now, whereby a percentage of the revenue from the provincial sales tax is provided to municipalities as a way to help them operate their services, for the benefit of citizens, and help to keep the level of property taxes down.

There are improvements that could be made in this system, but it works for the municipalities and is a form of revenue that they are able to count on in forming each year’s budget for their town, city or RM.

For a number of years too, the province had exempted municipalities from having to pay the PST on municipal construction projects, some of which are paid for by the revenue sharing grants, or by an infrastructure grant.

The exemption was removed in 2017, and in the years since, all municipalities have to pay the PST on their projects, even though it is for the benefit of their citizens, in providing roads, sidewalks, water and sewer facilities and other needs in their respective communities.

Really, this is a ludicrous situation that is only hurting the very municipalities that the province is purporting to help by providing revenue-sharing grants. What is the point of giving a city a grant only to take back a significant portion through the PST? 

According to SUMA, medium-sized cities in Saskatchewan returned 24 to 39 per cent of their total municipal revenue sharing grant back to the province in the form of PST on construction projects in 2021.

This is money that could have been used to pave roads, or replace watermains or sewer lines, but instead is just being given back to the province, all the while they are trumpeting about how much money they’ve given to the municipalities.

With ongoing pressures from inflation, this is something the government can and should act on, by providing a PST exemption to help municipalities out. 

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