2023-10. PST on Municipal Construction

Year: 2023


Whereas prior to the 2017 provincial budget, construction projects were exempt from Provincial Sales Tax (PST); and

Whereas the removal of that exemption left numerous municipalities and their ratepayers solely responsible for funding the additional costs of PST on projects that had already been approved for federal and provincial funding; and

Whereas the annual costs for larger municipalities averages out to more than a third of their total revenue sharing; and Whereas in smaller municipalities, PST on a large project may exceed their entire annual revenues sharing grant; and

Whereas the amount of PST paid that is returned to municipalities through revenue sharing is minor ($750 to the revenue sharing pool per $100,000 spent on PST)

Therefore be it resolved that SUMA advocate the Ministry of Finance to immediately reinstate a PST exemption on municipal construction projects.


Acts affected: The Provincial Sales Tax Act

Regions/Sectors: ALL

Provincial Response

Dear Randy Goulden:

Thank you for your May 11, 2023, letter regarding a number of resolutions made at the Saskatchewan Urban Municipalities Association's (SUMA) 118th Annual Convention.

Regarding the resolution to provide a Provincial Sales Tax (PST) exemption for municipal construction projects, I note that there has always been PST on material and supplies for infrastructure projects, which often makes up 50 per cent of the cost of the projects. Therefore, with PST changes introduced in 2017-18, the increase in the total PST applicable to construction contracts is between 2.5% and 3.5%.

Saskatchewan's PST is a tax of general application, applied to a broad base of goods and services. This broad application ensures that a fairly applied, reliable, and sustainable source of revenue is available to finance the many public services provided by our Government, including grants to the municipal sector, health care, and education.

Additionally, in 2023-24 this Government will distribute $297M to Saskatchewan municipalities through the Municipal Revenue Sharing (MRS} program, an increase of $172M over 2007-08. The MRS program provides $12,500 to the revenue sharing pool for every $100,000 spent on PST, not $750 as stated in your resolution.




Donna Harpauer

Deputy Premier and Minister of Finance

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