Saskatchewan repeals PST on insurance premiums

The Saskatchewan government says there will be no longer be a provincial sales tax on agriculture, life and health insurance premiums.

Premier Scott Moe pledged to bring in the exemption during the recent Saskatchewan Party leadership race. He says in a statement that the government is committed to helping families and small businesses. He adds it will not impact the government’s three-year plan to balance the budget by 2020.

“Our fiscal plan remains on track, even with this reinstatement of the PST exemption on crop, life and health insurance,” he says.

Read: How net cost of pure insurance affects policies

Moe notes the change will cost $65 million in revenue forecast for this fiscal year and $120 million for the following year.

The exemption covers premiums for crop, livestock and hail, as well as individual and group life and health insurance. It is retroactive to Aug. 1, 2017, the same day the province started adding the 6% PST to insurance premiums.

But the Saskatchewan NDP say the government didn’t do its homework before bringing in the PST hike in the last budget and is still standing by tax hikes that will raise the price of everything from kids’ clothes and home insurance to food and drinks.

Read: How to determine an insurance policy’s ACB

“The changes announced today will do nothing to help the construction industry, restaurant owners or families who have been struggling under the Sask. Party’s massive PST hike,” says finance critic Cathy Sproule in a statement.

Advocis supports decision

Advocis and its members in Saskatchewan are celebrating the news.

“Saskatchewan is now headed back in the right direction,” says Greg Pollock, president and CEO of Advocis. “The tax was a bad idea, and maintaining it would have a very negative impact on consumers in the long term. It was already hurting vulnerable residents such as those on fixed incomes and families struggling on minimum-wage incomes.”

Read: No to tax on insurance products: poll

When the tax was originally implemented, Advocis started a campaign to inform the public on the detrimental impacts of applying PST on insurance.

A poll done for Advocis in the days immediately following implementation of the PST on premiums showed that 53% of Saskatchewan residents felt the province was headed in the wrong direction. Further, 73% opposed the tax.

The survey also revealed the PST would make many Saskatchewan consumers consider reducing their life and health insurance coverage, or cancelling their policies altogether.

Read: How life insurance is taxed

“[The] announcement by the Government of Saskatchewan is not only in the very best interests of consumers in that province, but also great news for all Canadians,” says Pollock. “Other provinces were watching this issue closely. [The] decision will hopefully make other jurisdictions think twice about implementing similar insurance premium taxes that will hurt consumers’ long-term financial security.”