To the Editor:

Last Friday, Saskatche-wan Finance Minister Andrew Thomson announced the Provincial Sales Tax would be reduced from 7 to 5 per cent, which was well received by Saskatchewan residents and businesses. However, by not including a reduction in the Liquor Consumption Tax (PST on liquor), the government failed to provide much needed relief for the hospitality industry. The industry is still suffering from the effects of the anti-smoking legislation introduced in January of last year.

The Liquor Consumption Tax was raised from 7 to 10 per cent in 2003 to provide additional tax revenue for the NDP government that was struggling to provide a balanced budget to Saskatche-wan residents. At the time of the increase to the tax, there was also an industry price increase applied to domestic brewed products. Rather than pass on both increases to the consumer, most hospitality operators absorbed the increase of the LCT into their operating profits. This has caused considerable financial hardship for bar and tavern operators across the province. Since the anti-smoking legislation was put in place in January 2005, the hospitality industry has suffered losses of between 20 to 25 per cent in gaming and on-table sales revenues.

The end result is that since 2003, 52 hotels have closed in Saskatchewan. This has had a devastating impact, especially in rural areas, where the hotels are often the community gathering centre. These closures have far-reaching implications for the provincial economy in terms of job loss, contributions to out-migration, lack of economic spin-offs, and a deterioration in the tourism infrastructure.

The warm summer provided some relief as off-sale beer volumes were up, however, for hospitality establishments to remain viable, in-house sales must be present to provide adequate financial margins.

The hospitality industry has been trying to cope with high operating costs, labor shortages and negative legislative changes that have created a competititive environment that is steering its customers to government liquor stores and First Nation casinos. The government had a tremendous opportunity toassist the industry by lowering the LCT to equal the new provincial sales tax, but continually decides to ignore this industry.

Tom Mullin
President & CEO
Saskatchewan Hotel & Hospitality Association