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Construction celebrated in Sask. as province applies PST to labour costs
Published Monday, April 3, 2017 11:37AM CST
Last Updated Monday, April 3, 2017 6:44PM CST
Changes to PST on construction services took affect April 1, and Collaborative Construction was one of many companies scrambling to finalize contracts before the end of March. By signing before the deadline, they don’t have to charge their clients the newly applied tax.
"Lots of times our clients come to us with a fixed budget in mind so they know how much they want to spend on a renovation. Unfortunately now that means that budget will be six per cent less now because that's going to have to go towards PST,” Trever Anderson, co-owner of Collaborative Construction said.
The change has Anderson and his partner considering how they can create efficiencies to save the extra costs to their clients, including eliminating staff.
“Hopefully it doesn’t come to that, but you never know,” Anderson said.
In the latest budget, the provincial budget removed the PST exemption to construction labour. It also added an exemption to construction materials. According to the Saskatchewan Construction Association, the changes will mean projects will now cost between two and five per cent more, depending on how much labour and materials are needed to complete the work.
Economy Minister Jeremy Harrison says the industry is understanding to the changes.
“They're sophisticated operations, they know we have a real challenge,” Harrison said.
“They know what happens when they're expenses are greater than their income.”
The changes come as the province celebrates its first-ever Saskatchewan Construction Week.
The industry is the second-largest employer in the private sector, with roughly 51,300 people employed across the province.
The week kicked off with a breakfast in Regina on Monday morning, and has events running throughout the province all week.
According to the Saskatchewan Construction Association, employees in the industry took home an estimated $3 billion in wages in 2016. Those earnings are roughly 25 per cent higher than average wages collected across industries in Saskatchewan.
Saskatchewan Construction Association CEO Mark Cooper said local companies will likely feel a shift as a result of the PST changes, but that the industry should bounce back to normal within a year.
“Ultimately the show must go on and the work must get done. People will adjust to the new reality and people will make the choice to invest,” Cooper said.