Provincial sales tax (PST) will be applied to insurance premiums in Saskatchewan come August 1, and at least one financial expert believes it will backfire.
According to the finance minister, adding the six per cent tax to premiums will bring in $230-million a year for the province.
Brian Mallard, former chairman of the Financial Advisors Association of Canada, is skeptical.
“Mathematically, the numbers just don’t add up,” he told Gormley Monday.
He said he believes people will be likely to change their policies or get rid of things like life insurance to avoid the additional cost.
“This six per cent tax is going to hurt those people who need coverage the most,” Mallard said. “They’re the ones at the perimeter of the economy that have to make the really tough decisions.”
On Monday Saskatchewan Finance Minster Kevin Doherty said the PST change could have unintended consequences.
“Will that (the PST) prevent someone from buying a life insurance policy right now?” he said. “That could be the case, we don’t know that yet.”
Doherty went on to say “What we do know is we need sources of revenue in this province to pay for services the people in this province expect and deserve.”
Once PST is applied to premiums Doherty said they’ll see how residents and businesses are affected with the help of the insurance industry.
Originally the 2017 provincial budget had the change set to go into effect on July 1, but after consultation it was move to Aug. 1.