POP: Eliminate PST on Pest Control Products

POP: Yes
Res #: POP 1-05M
Number: 1
Year: 2005
Midterm: Yes
Expired: Yes
Responses Received: No
Departments: Saskatchewan Finance

Point of Privilege Resolution No. 1-05M

WHEREAS, all retailers and suppliers of Pest Control products are required to charge PST on the sale of pest control supplies; and

WHEREAS, exemptions on PST already exist on other agriculturally related products; and

WHEREAS, the costs of the various pest control products are becoming excessive and thereby forcing the agriculture producer to eliminate or reduce the level of pest control on their farms or having the RM subsidize the sale of these products;

THEREFORE BE IT RESOLVED, that SARM lobby the Province of Saskatchewan to eliminate the PST on all pest control products being sold and distributed for rodent control so as to have these products become more affordable.

Response from the Honourable Harry Van Mulligen, Minister of Finance:

The Province currently exempts a wide range of pest control products from the Provincial Sales Tax (PST). Insecticides, fungicides and herbicides purchased for use by a farmer or by a municipality for use on road allowances are all PST exempt. As a category, the existing PST exemptions on fertilizers, pesticides and seeds cost the Province in excess of $93 million annually. While rodent control may be an important issue for some areas of the province, expanding the existing PST exemptions to include pest control products used for rodent control would reduce the funds available for other key programs such as roads, education and health care.

SARM responded to Minister Van Mulligen's letter and asked him to reconsider his decision not to eliminate the PST on all pest control products sold and distributed for rodent control.

Response from Honourable Harry Van Mulligen, Minister of Finance:

Thank you for your recent letter asking us to reconsider your request for a Provincial Sales Tax (PST) exemption for pest control products used to control rodents. As you know, changes to the PST base cannot be made lightly. The decreased revenue associated with new tax exemptions must be balanced with the need to fund existing programs and services. We receive many requests for new or expanded tax exemptions. While we would like to enact most of these exemptions, the Province's finances often limit our ability to do so. Consequently, as part of the annual budget process, the economic and social benefits of suggested exemptions are weighed against the Province's financial ability to forego the tax revenue associated with each proposed exemption. Your request to establish an exemption for pest control products used for rodents will be reviewed and considered as part of that process and any changes to the taxation of rodent control products will be announced as part of a future provincial budget.

Response from Doug Matthies, Deputy Minister of Finance:

As you are no doubt aware, the Province has established a Business Tax Review Committee in 2005 and the Committee presented its Report and November 2005.

The Government acted on that Report in the 2006-07 Provincial Budget by taking steps leading to the elimination of the general corporate capital tax except for Crown corporations and financial institutions; reducing the general corporate income tax rates; increasing the income limits eligible for the lower small business tax rate; and converting the investment tax credit on manufacturing and processing entities to a refundable credit. 

The Committee also recommended that the Government pursue strategies that reduce the tax burden more broadly, rather than provide targeted exemptions.  The Committee noted that "the true cost of any targeted tax measure is the lost opportunity it creating by requiring higher taxation or less public services."  This is essentially to say follow a strategy of "a rising tide lifts all boats."

You will also be aware that on October, 27, 2006, the Minister of Finance announce that the PST will be reduced from 7% to 5%, in line with the direction of the Committees recommendation of broad based measures.

The Government has effectively adopted the recommendation of the Committee.  Therefore, while I regret to advise you that your request for PST exemption for rodenticides is not the policy direction of the Government, these products and others will now benefit from the across the board PST reduction.