How will the PST hike hit you in the pocketbook?
Restaurant meals, children's clothing, insurance premiums will soon cost you 6% more
Saskatchewan has just put a double-whammy on the provincial sales tax — the rate is going up, but so is the list of things it covers.
Today, Finance Minister Kevin Doherty announced in his budget that the PST is being hiked to six from five per cent, a change that will bring in an extra $242 million.
It means a new car purchase of $30,000 will require an extra $300, effective midnight tonight.
There's also a slew of other things that will be taxed starting April 1 that were previously PST exempt.
- Restaurant meals and snacks — adding $94.5 million into the province's coffers.
- Children's clothing — bringing in an extra $15.6 million.
Insurance premiums will have the PST applied starting July 1 — adding $157.9 million to the treasury this year.
Of all the big-ticket items that are, as of April 1, newly covered by PST, the biggest is construction contracts — whether it's building new structures or renovating and repairing property.
That change is expected to bring another $344.6 million.
The government said the annual tax credit for low-income residents would be increased by $100 per adult and $40 per child in an effort soften the impact of the PST hike.
That cost of increasing the credit amounts to $34 million. It will take effect on July 1.
PST take expected to exceed $2B
According to budget documents, the government is expecting to rake in $2.05 billion in PST revenue this year, which is $737 million more (or 56 per cent more than what was in the budget the previous spring).
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Outside of the PST, one of the biggest tax increases is to fuel taxes.
The gasoline tax exemption for bulk purchases is being eliminated. The exemption for diesel fuel has been reduced to 80 per cent, a change that will bring in an extra $40 million. The exemptions were popular with farmers.
Cigarettes will cost more
So-called "sin taxes" are also going up.
Cigarettes will cost two cents more apiece (raising $10 million) on March 23 while the price of booze is going up on April 1 — 6.8 per cent more for beer, for example — adding $5 million to the finance ministry kitty.
Education taxes rising
The tax take on educational property taxes (for residences) is set to increase to $359.6 million from $324.7 million — a 10.7 per cent hike.
Meanwhile, the government says it's not just hiking taxes, but is "shifting" part of the burden away from income taxes.
A lower personal income tax rate will save individuals $82.2 million in 2017-18, while a lower corporate income tax rate will save businesses $25.3 million, the province says.
Clothing exemption was abused: Doherty
Asked why children's clothing specifically was being taxed, the government said the change would "eliminate a source of significant tax abuse."
That's because some people have been writing off purchases for children's clothing that they didn't make, the government said.
"There was a tremendous amount of tax leakage on children's clothing," said Finance Minister Kevin Doherty.
Changes will hurt families: NDP
NDP Finance Critic Cathy Sproule said the changes would be a blow to families.
"'Ow.' That's what the average family is going to say," said Sproule.
"Children's clothing — that's an important reduction or exemption for families. There's a number of things here that are going to hit families really hard."
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