Municipal PST Refund
Res #: 24-09A
Responses Received: No
Departments: Saskatchewan Ministry of Finance
Whereas in the August/September 2008 issue of the Rural Councillor in the article on the new FCM Infrastructure Calculator, the impact of local government infrastructure investments and how they stimulate the provincial and federal economies was highlighted; and
Whereas according to this article for each dollar invested in municipal infrastructure, 17 cents in direct financial benefits is generated to the provincial government and 18 cents in direct financial benefits to the federal government through increased sales and income tax revenue; and
Whereas local governments do not have direct access to these revenues but are subject to pay gst and pst; and
Whereas local governments receive 100% of the gst they pay rebated back each year; and
Whereas local governments being able to receive a similar 100% pst rebate would greatly reduce some of the strain on our property tax base;
Be it Resolved that SARM lobby the Provincial Government to rebate local governments 100% of the provincial sales tax.
Response from Honourable Rod Gantefoer, Minister of Finance:
The Government of Saskatchewan provides support to the municipal sector through a revenue sharing formula. This method of funding is a clear and accountable mechanism which allows municipalities to make autonomous fiscal decisions based on local priorities.
The recent Throne Speech committed the Government to develop a long-term and predictable solution to municipal operating grants that ties annual funding to Provincial Sales Tax (PST) revenue. The 2009-10 Budget initiated a two-year plan for municipal operating grants that will provide provincial funding based on the value of one percentage point of the PST by 2010-11. This initiative will provide municipalities with $167.4 million in unconditional funding this year, an increase of $32.3 million from the 2008-09 funding allocation.
Implementing the resolution to exempt municipalities from paying the PST would change the nature of the Province's support for municipalities while complicating the administration of the PST.