Doherty defends PST increase

Rob Horn of Fresh Air Experience (foreground) asks a question of Finance Minister Kevin Doherty on March 24 at the Prince Albert Inn. (Peter Lozinski/Daily Herald)

P.A. businesses challenge tax increases at chamber luncheon

Provincial Finance Minister Kevin Doherty faced a tough crowd at the Prince Albert Inn Friday as he stopped by Prince Albert for a luncheon talk hosted by the Chamber of Commerce.

Doherty used the opportunity to speak about Wednesday’s provincial budget and answer questions posed by local business owners, educators and other interested people.

“Our government made every effort to control and reduce spending while still providing the level and quality of government services that you people expect and deserve,” Doherty said in his prepared remarks.

“But ladies and gentlemen, the fiscal challenge was too great to close it all in one year, and too great to close it all just on the spending side.”

As a part of that budget, the provincial government raised the sales tax from five to six percent, and removed some tax exemptions, including on construction labour.

Those changes led to questions from local business owners.

Doherty argued the changes would actually make the sector more competitive.

“We’ve added the six per cent PST to the labour portion, but you’re now buying your materials PST free. Alberta doesn’t have a PST.”

Under the old system, Doherty said, a contractor from Alberta would bid on the job, buy materials for the job in their own province and get an automatic five per cent margin.

“They’re supposed to call my ministry and declare that they bought these materials in Alberta and pay the PST here,” he said. “I don’t think they all did that.”

Under the tax changes, those contractors now have to embed the PST into their contract to show the customer the full costs.

“You do too,” Doherty said to the local business owner, “But neither one of you has to pay PST on your inputs, your building materials. Is there more coming out of the consumer’s pocket? Absolutely there is. I acknowledge that. It averages out to about 2.5 per cent.”

Another business owner, Ron Horn of Fresh Air Experience, was concerned the higher PST might mean more people might buy high-cost items such as canoes and kayaks in Alberta instead of from his store.

For more on this story, please see the March 25 print or e-edition of the Daily Herald.