In the 2017-18 budget, the Government of Saskatchewan removed a longstanding exemption to the application of the Provincial Sales Tax (PST) on insurance premiums, which came into effect on August 1, 2017. During the Saskatchewan Party leadership campaign that followed, however, then-candidate and now-Premier Scott Moe vowed to reverse the repeal on life, health, and certain agricultural coverages, retroactive to the time of enforcement.
The team at IBAS worked closely alongside Ministry of Finance officials in the months of March and April to finalize: The details with respect to what specific policies would be subject to PST going forward, how the reimbursement process would be facilitated, and how these decisions would be communicated to insurance brokers and the general public.
IBAS is supportive of the government’s efforts to responsibly manage the Province’s finances, but remains very concerned of the impact the application of the Provincial Sales Tax (PST) on insurance premiums will have on consumer protection.
Consumers today face mounting financial pressures, from slow economic growth to rising taxes. Families and businesses alike are feeling the pinch. By adding the six per cent PST onto P&C insurance premiums — on top of the taxes already collected by the Province under the Insurance Premiums Tax Act — the government is discouraging citizens to invest in their financial security and protect themselves from unexpected hardships. This may result in cancelled or reduced coverage, higher long-term premiums, weakened business competitiveness, and increased risk on public services.
IBAS believes all decisions related to the taxation of insurance should be data-driven, evidence-based, and fully transparent. Specifically, IBAS is calling on the provincial government to:
- Conduct a comprehensive review exploring the potential short- and long-term impact on consumers, the business community, and the social services system; and
- Establish a standing consultation process alongside IBAS, consumers, and other industry stakeholders, to study all proposed future changes to Saskatchewan’s insurance framework in a transparent, proactive, and comprehensive manner.
IBAS is also adamant that any change to the PST regime must not coincide with an increase to the Insurance Premiums Tax.