By Olivia Lawrence
For small business owner Brian Rutten, a proposed tax rate reduction has potential benefits for his 20-year-old neighbourhood restaurant and bar in Carlyle.
“Right now we are able to pay our staff and cover monthly expenses,” said Rutten, co-owner of The Office Grill & Bar.
“Business owners are always the last to get paid so a tax reduction could mean a pay cheque for me. It would be nice to get something out of this year.”
The Office currently has 15 employees. The restaurant and bar is currently seating half its capacity and reduced night hours have been put in place because of COVID-19.
In hope of alleviating some of the financial stress on small businesses Saskatchewan Premier Scott Moe announced last week that he intended to reduce small business tax rates for the next three years if his Sask Party is re-elected.
“Every dollar for small businesses matters right now,” said Rutten. “We are just trying to stay afloat. But our business has been very fortunate, the locals have really supported us. They are the largest reason why we have been able to stay open.”
Rutten acknowledged that having an older and established small business is more advantageous for tax breaks, especially during times like these. Not only does The Office have a well-known community reputation and regular customers, but it does not have the extra expenses like mortgage payments that many new businesses have to face.
“The tax reduction could also help with necessary upgrades to the building which would make life better at The Office, said Rutten. “But I can’t go without saying that someone is going to have to pay for all of this when it is all said and done.”
The reality for Julia Fullerton’s small business is different — she does not see the benefit of a tax rate break for her small business. Fullerton has owned a hair and barber shop for seven years in downtown Regina called “J Fullerton Hair.” Fullerton’s business has just two employees, herself and another colleague. J Fullerton Hair is a small business but the size is so small that it is considered a micro-business.
“My business is often overlooked due to its size,” said Fullerton. “A tax break is not going to help me through these difficult times because my business only has income from two employees. I only see this as giving breaks to small businesses who are already bringing in high profits.”
Instead of a tax rate break, Fullerton suggested an alternative tax resolution, to reduce Provincial Sales Tax (PST) for small businesses.
“It would mean a more level playing field for small businesses and I would pay less remittances to the government,” said Fullerton.
Reducing PST would mean that products like hair colour, shampoo and conditioner that Fullerton buys and sells would cost less. Fullerton sees this as not only benefiting her but her customers as well because they would be more inclined to purchase some of her products.
“Micro-businesses already run such thin margins to begin with, so when you’re put up against something like a pandemic you’re stretched to your limits, said Fullerton. “During times like these I do not have additional capital to fall back on so I need support.
“I just think that the current government needs to reconsider what constitutes a small business, and introduce solutions that benefit all small businesses.”
According to a recent Sask Party media release, Moe expects the tax breaks will benefit “about 31,000 Saskatchewan small businesses incorporated Saskatchewan small businesses … Saving them over $189 million in provincial taxes over the next three years an average savings of over $6,100 per Saskatchewan small business.”
Businesses in Saskatchewan are considered small if they have less than 50 employees. The current tax rate for small businesses is two percent. Starting retroactively on Oct. 1 the rate would drop to zero percent and then on July 1, 2020, the rate would move back to one per cent. On July 1, 2023, the rate would return to two per cent.