Flush with cash and with an election on the horizon, the Saskatchewan government is lowering its provincial sales tax to five per cent from seven per cent.
Finance Minister Andrew Thomson made the announcement Friday in the provincial legislature. The cut takes effect midnight Friday night.
Saskatchewan Premier Lorne Calvert said there could be real benefits to reducing the sales tax before Christmas shopping.
(Troy Fleece/Canadian Press)
The reduction undoes, and surpasses, a PST hike that the NDP government brought in two years ago when the province's finances were not as rosy and the tax rate went from six per cent to seven in the spring budget.
Since then, the province's revenues have been soaring, thanks in large part to surging oil prices.
Normally, tax changes are brought in with the budget, but Premier Lorne Calvert said earlier this week there could be real benefits to reducing the sales tax before people do their holiday shopping.
In this year's budget, the seven per cent PST was projected to bring in more than $1 billion. Thomson said the two percentage point cut represents a $325-million saving to families and businesses.
With a five per cent PST, Saskatchewan will have the lowest provincial sales tax in Canada after Alberta, which doesn't charge PST.
It's the second major tax cut the NDP has introduced this year.
In April, Thomson announced a $95-million package of corporate tax cuts that will rise to $240 million in three years.
Calvert is expected to call a provincial election in 2007.
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