Saskatchewan's Small Business Sector Under Severe Strain
Saskatchewan's small businesses have demonstrated remarkable resilience through numerous challenges including wildfires, droughts, a global pandemic, and economic fluctuations. However, this resilience should not be misinterpreted as infinite capacity to withstand mounting pressures. After years of compounding difficulties, many small enterprises are now operating with virtually no margin for additional costs or risks.
The Reality of Daily Operations
A retail business owner from central Saskatchewan articulated the situation clearly: "Far too many headwinds. As a result, consumers have less discretionary income, less confidence, prices are up on everything, and we're still not fully recovered from COVID." This statement highlights how the combined impact of escalating costs and diminished consumer spending creates increasingly difficult day-to-day operational challenges.
Trade uncertainty further complicates matters, making long-term planning exceptionally difficult. "The tariff situation, combined with uncertainty around other economic factors, has caused concerns among customers and delayed or paused projects," explained a construction business owner. These effects create a ripple effect throughout the economy, suppressing investment, slowing job creation, and weakening overall economic momentum.
Tax Structure Discouraging Investment
These operational pressures are exacerbated by a tax system that continues to penalize business investment. Saskatchewan remains one of the few provinces that applies Provincial Sales Tax (PST) to capital purchases such as machinery and equipment. According to a recent Canadian Federation of Independent Business (CFIB) survey, nearly half of Saskatchewan's small businesses report that the inability to write off PST discourages them from making investments.
CFIB research estimates that eliminating PST from capital inputs could substantially increase investment and inject hundreds of millions of dollars into Saskatchewan's economy. Despite this potential benefit, Saskatchewan maintains one of the highest marginal effective tax rates on investment in Canada.
Rising Fixed Costs and Weak Demand
While there have been numerous high-profile announcements about large infrastructure projects and trade missions, the priorities of Saskatchewan's small businesses remain fundamentally simpler. They require predictable costs, stable tax policies, and a regulatory environment that genuinely supports growth.
Unfortunately, fixed operating expenses continue to escalate. Recently announced increases to SaskPower rates and SGI premiums add to a growing list of unavoidable costs that small businesses cannot offset. Utilities and insurance represent fixed expenses necessary simply to maintain business operations. While larger corporations might absorb these costs through economies of scale, for small businesses they further erode already razor-thin profit margins.
Compounding these challenges, more than half of Saskatchewan's small businesses report experiencing weak consumer demand, meaning many have endured months of stagnant or declining sales. When demand remains low, businesses have virtually no ability to pass increased costs onto customers without risking lost sales. Consequently, they implement cost-cutting measures wherever possible: hiring plans are postponed, operating hours are reduced, and productivity-enhancing investments are deferred indefinitely.
The Path Forward
The cumulative effect of these challenges creates a precarious situation for Saskatchewan's small business sector. While these enterprises have proven their ability to adapt and survive through difficult circumstances, the current combination of high taxes, rising fixed costs, and weak demand presents one of their most significant tests in recent memory. Addressing these issues through thoughtful policy adjustments could help restore the conditions necessary for small business growth and economic vitality across the province.
