GOVERNMENT CUTS PST FROM 7 TO 5 PER CENT

Released on October 27, 2006

The provincial sales tax (PST) will drop from seven to five per cent effective midnight tonight. Saskatchewan residents and businesses will see about $325 million in savings annually thanks to the two percentage point sales tax reduction.

"We want to ensure that all Saskatchewan families benefit directly from the province's strong economy," Premier Lorne Calvert said. "This will ensure Saskatchewan remains the best place to live, work and raise a family."

The PST reduction benefits everyone, Calvert noted, by lowering costs for individual consumers, families, municipalities and public institutions, including schools, universities and hospitals.

"We are enjoying prosperous times in Saskatchewan, affording us the opportunity to provide this tax relief," Calvert said.

Beginning with personal income tax reform in 2000, the business tax reform introduced in this year's budget, and tonight's sales tax reduction, Saskatchewan people and businesses will now benefit from over $750 million in tax reductions annually.

"Our government has introduced some of the most significant tax reforms in this province's history," Calvert said. "Our record on tax relief demonstrates we are making life better for today's families and businesses, and building a better future for our youth."

Other tax changes associated with the PST reduction include:

• A tax increase of 20 cents per package of 25 cigarettes, with a comparable tax increase for cut tobacco, to ensure that the price of these products remains the same; and

• A reduction of the Investment Tax Credit for manufacturing and processing to five per cent to match the PST rate reduction.

Both the Liquor Consumption Tax and Saskatchewan Sales Tax Credit will remain unchanged.

Further details on the PST reduction and other tax changes are included in the attached backgrounder.

Businesses looking for more information can contact the Department of Finance toll free at 1-800-667-6102 or in Regina at 787-6645.

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For More Information, Contact:

Marie Trafford Media Services Regina Phone: (306) 787-0963 Email: marie.trafford@gov.sk.ca Cell: (306) 539-0379

Mike Woods Finance Regina Phone: (306) 787-6578 Email: mwoods@finance.gov.sk.ca