Budget upsets potash producers – by Bruce Johnstone (Regina Leader-Post – March 19, 2015)


Sask. to gain, industry to lose

A change in the province’s potash royalty regime in the 2015-16 budget will net the Sask. Party government $150 million this year, Finance Minister Ken Krawetz announced Wednesday. The government also promised to revamp the province’s complex potash royalty scheme in consultation with the industry over the next year or two.

But the province’s biggest potash producer indicated the royalty change will negatively affect earnings and amounts to “changing the rules midstream.’ The budget said changes will be made to the Potash Production Tax “to defer the timing of capital deductions in order to prove an immediate and temporary increase in revenue from potash companies. The total amount of deductions producers received from their capital spending will now be utilized over a longer period of time.

“This is an interim step that will be followed by a review of the entire potash royalty and taxation regime.’ Krawetz told reporters that the government has held “ongoing consultations with the potash industry’ about the impact of the changes.

“After these smaller changes that we’ve been working on for a number of months, there will be a broader review over the next year or two. We want to ensure that the people of Saskatchewan who own the resource are rewarded at an appreciative rate,’ Krawetz said.

“With that small change, which will amount to about $150 million this year, plus the growth in the potash industry … we’re projecting (potash revenues) will be at about $400 million more in this year’s budget than last year.”

But Potash Corp. of Saskatchewan, the world’s largest potash producer, claimed the budget change would reduce the Saskatoon-based company’s 2015 pre-tax earnings by $75 million to $100 million.

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