Saskatchewan small businesses – who have a long road ahead on the race to recovery – must feel like their government is tying their shoelaces together at the starting line.
With less than half of businesses back to normal sales and facing skyrocketing inflation, historic supply chain disruptions, and chronic labour shortages, the Saskatchewan government has made the baffling decision that now is the time to pile on multiple, unexpected new costs. Making matters worse, they’ve done so with virtually no consultation with small business, and no effort to help offset the costs.
Good luck. You’re on your own. Don’t trip.
The bad news started when the Saskatchewan government tabled its 2022 budget and announced plans to expand the Provincial Sales Tax (PST) to include gym memberships and admission to arts and sports events. Given the current mood of price-conscious consumers, the move is going to hurt many of the small businesses that are among those most heavily impacted by the pandemic.
The budget also confirmed the government’s previously announced plan to re-introduce the small business corporate tax and double it in 2023, taking much-needed money away from small businesses that could have been reinvested in employees, equipment or in growing operations.
As the budget was tabled, SaskPower’s 2022-23 rate application began making its way through the approval process. SaskPower is proposing a 4.4% rate hike for the small commercial sector and a 4.5% increase for farms in 2022, followed by another hike in 2023, adding an estimated $360 to annual energy bills over two years – meaning even more new costs for small businesses at a time when they can least afford it.
Spring brought the surprise announcement of a 27% minimum wage hike over the next two and a half years. The move marks a significant departure from the government’s longtime policy of predictable annual minimum wage increases tied to inflation and will put even more cost pressure on all small businesses as the hike trickles up.
Hiking taxes, hiking electricity rates, and hiking payroll costs all lead to one place: increased prices. That’s a big problem. There is a limit to how much of its costs a business can pass on to its customers and remain viable, and that limit is already being tested coming out of the pandemic.
Business groups like the Canadian Federation of Independent Business have met with ministers in the Moe government and shared member data that reveals the struggles small businesses are facing.
We have been consistent and persistent in our message: now is not the time to impose new costs on small businesses.
The good news for the Saskatchewan government: there’s still time to act.
First, they should properly consult small businesses about the impact of adding multiple new costs and how best to mitigate the damage. Then, they should implement cost-offsetting measures. Some ideas include scrapping the 6% PST expansion, keeping the small business tax rate at 0% until more businesses have recovered, and introducing training or hiring tax credits to help with the high cost of bringing on new staff.
The choice to do nothing but add costs makes no sense in the current economic climate. Rather than tripping small businesses at the starting line, the Saskatchewan government should be giving them a running start.
Senior Policy Analyst for the Canadian Federation of Independent Business