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Producers not happy with changes to Saskatchewan’s potash production tax

Exports from Saskatchewan reach record level in 2012 pushing province to fourth place for shipping goods out of Canada.
Potash producers say they will be subject to highest royalty and tax rates in the world with changes to Saskatchewan’s potash production tax. File / Global News

Producers are not happy with changes to Saskatchewan’s potash production tax.

Finance Minister Donna Harpauer said credits and deductions to the potash production tax will be eliminated on April 1.

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Harpauer said the original intent of the base component of the tax was to provide a simple flat payment per tonne of sales.

“However, it has gradually been eroded by currently allowable deductions,” Harpauer said Wednesday in her 2019-20 budget.

“To address this … the calculation of the potash production tax will be simplified by eliminating these deductions.”

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Nutrien said it is disappointed with the announcement, which they said was made without consulting potash producers.

“With these changes, Saskatchewan potash production will be subject to the highest royalty and tax rates in the world,” said Nutrien spokesman Will Tigley in a statement to Global News.

“In recent years, the potash mining industry has incurred significantly increased costs and this is yet another step to reduce Canadian competitiveness.”

The Saskatchewan government expects the change will increase revenue by $117 million.

Mosaic’s vice-president for government relations and public affairs Sarah Fedorchuck said the company is still doing its own internal calculation of what the implication of the tax changes are, but two impacts are evident.

“For us, what it’s going to mean is less profitability for our business and I think it’s also going to lead to a lot of uncertainty around future investment in the province,” she said.

“When we’re looking at locations where we’re going to put our investment dollars, regulatory certainty is really important to us. So having rules shift, after we spent $5 billion in Saskatchewan over the last decade has us concerned.”

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Like Nutrien, Mosaic also would have preferred to see prior consultation. Both are publicly traded companies, which is why Energy and Resource Minister Bronwyn Eyre said prior consultation was not an option due to market sensitivity.

“We’ll stand here any day and defend our record when it comes to competitiveness and leaving no stone unturned as we said many times when it comes to competitiveness,” Eyre said. “We’ve seen $20 billion in investment in potash in the last decade. Those numbers speak for themselves.”

Since 2015, there has also been talk of a royalty rate review on potash. Despite this recent tax change, that rate review remains on pause, according to Eyre.

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