Construction earnings and employment declined sharply in Saskatchewan in 2018, more than any other province. The NDP has called for ending collection of Provincial Sales Tax (PST) on construction contracts.
Statistics Canada reported that average weekly earnings in Saskatchewan’s construction industry fell from $1,360.19 in December 2017 to $1,233.08 by the end of last year. That pushed Saskatchewan down from second among the provinces to slightly below the national average. Employment in the sector dropped from 30,261 to 28,336 workers over the same period, the Regina Leader-Post has reported.
Most other Canadian provinces reported construction employment growth last year. While Alberta lost more construction workers, Saskatchewan led the decline in percentage terms.
In a news release, the Saskatchewan NDP related the industry’s plight with the provincial government’s 2017 decision to apply provincial sales tax (PST) to construction contracts.
Previously, PST had only applied to construction materials. The 2017-18 budget changed tax rules to impose the levy on the final contract or sale price, effectively extending the tax to labour and overhead.
Since the added tax took effect April 1, 2017, it added about $197.6 million to the provincial revenues, less than the anticipated $350 million.
“The Saskatchewan Party has stubbornly stuck to this damaging tax hike, meanwhile construction companies throughout the province are hurting from real consequences,” NDP finance critic Trent Wotherspoon said. “With so many jobs and contracts lost, the right move for the province’s economy would be to scrap this tax hike in the upcoming budget.”
Mark Cooper, the Saskatchewan Construction Association (SCA)‘s CEO, says the NDP is right to draw a link between the tax hike and the StatsCan data, which further underlines what he called the industry’s “sombre” and “uncertain” mood.
“There’s no doubt that adding the PST onto construction labour is a tax on investment and a tax on growth,” he said. “That’s not a good choice, and we’ve said that pretty consistently.”
The provincial government called the 2017 decision was “difficult, but necessary” as the province attempted to balance the budget and reduce its reliance on “volatile resource revenues.” It noted that the government is still planning to achieve a balanced budget by the coming fiscal year.
“When the budget is balanced, our government will be in a position to take a fresh look at our entire range of tax policies, to determine whether we might be able to provide some tax relief to our residents in areas where it is most needed and would have the greatest economic impact,” the government said.