Exempting Municipalities from Paying Provincial Sales Tax

Year: 2006


Therefore be it resolved that SUMA lobby the Provincial Government to exempt municipalities from paying Provincial Sales Tax.

Provincial Response

The PST is a tax of general application which is intended to help finance the many public services provided by the Government of Saskatchewan. The requirement that municipalities pay the PST on their purchases is consistent with the taxation treatment of all other public sector bodies including health districts and school divisions, as well as charitable organizations. Furthermore, a general PST exemption for municipalities would add administrative complexity to the PST for both the vendors who collect the PST and the Province. I note that Provincial support for the municipal sector is provided through a general revenue-sharing formula. This formula is designed to equalize local fiscal capacity and support basic infrastructure to meet the needs of the people of Saskatchewan. This funding is unconditional and can be used by municipalities for either operating or capital purposes. Support provided in this way does not create distinctions between municipal purchases of goods and services that are taxable by the PST and those that are not. the 2005-06 Budget committed over $143 million in support of municipal governance. In February 2006, the Province announced additional one-time funding support for municipalities, including $32 million for the Community Share 2006 program and a $10 million top-up of unconditional revenue-sharing for 2005-06 and 2006-07.

Back Print