There were a lot of upset people when the provincial government handed down its budget earlier this year.
People were complaining about the increase in the provincial sales tax (PST) to six per cent, griping about the cancellation of the grants-in-lieu of taxation for municipalities, worrying about the demise of the Saskatchewan Transportation Company, and protesting about the reduction in funding for regional libraries. (The latter decision was reversed, but only after a startling outcry).
Not only did the PST jump from five to six per cent in the budget, but it is now being applied to several expenses that were previously exempt, including children’s clothes, restaurant meals and construction services.
But perhaps the exemption that will have the most widespread impact is insurance premiums. People started paying PST for insurance on Aug. 1.Ìý
It hurts that PST is now on restaurant meals, but restaurant meals are a luxury. We all enjoy eating out, and we have great restaurants to choose from locally, but eating out is, was and always will be a luxury.
PST on children’s clothing and construction services will hurt those who have to make those purchases, but those don’t affect everyone, either.
Insurance is another story. Virtually everyone has insurance of some form, whether it be vehicle, life or home, or all of the above. If you’re a homeowner, you have a policy. If you’re a renter, you’re better off with insurance.
And it is essential. If you want to legally drive a vehicle in this province, you need to be insured.
People are going to see their rates climb. Most people can afford what amounts to a moderate increase for insurance premiums, but for those who are low-income earners, who are living paycheque to paycheque, and who have a minimal financial margin of error, this will hurt.
It could force some to evaluate whether they can afford their insurance packages. Some might drop a policy to save money.
And that will hurt insurance companies, too, which is why it’s surprising the business-friendly Sask. Party government would make this move.
It will also hurt farmers, who will see their premiums for crop insurance increase. And with drought gripping the southern portion of the province this spring and summer, there will be a lot of farmers in need of crop insurance.Ìý
We wouldn’t have been surprised if the government backtracked on this move. Remember, in the face of mounting public pressure, they decided to allow regional libraries to retain their funding.
The outcry for PST on insurance premiums wasn’t as overwhelming as what we saw for the lost funding for regional libraries, but a lot of people are upset with the government’s move.
One day, when the province’s economic picture improves, perhaps the government will retract the PST on premiums. Just don’t expect it to happen soon.
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