Saskatchewan’s Small Businesses Face Urgent Economic Pressures

Saskatchewan’s small businesses are grappling with significant economic challenges, threatening their survival and growth. Despite a track record of resilience in the face of wildfires, droughts, and the COVID-19 pandemic, many firms are now operating with minimal financial margins. A retail business owner in central Saskatchewan succinctly expressed the situation: “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.”

The cumulative impact of rising costs and diminished consumer spending is straining everyday operations. Trade uncertainties further complicate the landscape, making long-term planning a daunting task. A construction business owner noted that “the tariff situation, combined with uncertainty around other economic factors, has caused concerns among customers and delayed or paused projects.” Such conditions not only hinder investment but also stifle job creation and slow overall economic momentum.

Compounding these issues is Saskatchewan’s tax structure, which imposes a provincial sales tax (PST) on capital purchases like machinery and equipment. According to a recent survey by the Canadian Federation of Independent Business (CFIB), nearly half of small businesses in Saskatchewan reported that the inability to write off PST discourages them from investing. CFIB research indicates that eliminating PST on capital inputs could inject hundreds of millions of dollars into the provincial economy, yet Saskatchewan maintains one of the highest marginal effective tax rates on investment in Canada.

While there have been numerous announcements regarding large infrastructure projects and trade missions, the core needs of small businesses remain straightforward: predictable costs, stable taxes, and a supportive policy environment. Unfortunately, fixed operating expenses are on the rise. Recently announced increases to SaskPower rates and SGI premiums have added to the burdens that small businesses cannot easily offset. Utilities and insurance represent fixed costs necessary for business operations, and larger firms can often absorb these expenses more effectively than their smaller counterparts, which face increasingly narrow margins.

Moreover, over half of Saskatchewan’s small businesses report weak demand, leading to months of stagnant or declining sales. In such a climate, businesses struggle to pass on rising costs to customers without risking even lower sales. Consequently, many are forced to cut back on hiring, reduce operating hours, and delay investments that could enhance productivity.

CFIB’s message is clear: when governments or Crown corporations increase unavoidable costs, it is vital to implement offsetting measures. Small businesses require not only predictability but also policies that recognize how manageable decisions can quickly escalate into overwhelming burdens. The upcoming spring provincial budget presents an opportunity to prioritize stability, introduce cost-offsetting measures, and eliminate barriers to investment.

CFIB has submitted its recommendations to Saskatchewan’s finance minister to support local small businesses and is urging the government to take decisive actions that restore confidence in these vital community anchors. Small businesses have demonstrated their ability to endure extraordinary challenges. With the right support, they can not only weather the storm but thrive in more favorable conditions.

Brianna Solberg serves as CFIB’s director of legislative affairs for the Prairies and Northern Canada.