The provincial budget increases due to tax changes to royalty structure were not well-received, according to Saskatchewan potash producers.
Although potash mining has been a huge provider of jobs and economic opportunities for Saskatchewan residents and businesses and has invested over $20 billion in Saskatchewan, last week’s provincial balanced budget is deemed to cost potash producers an addition $117 million annually in taxes as a result of unilateral changes to the potash royalty structure, said Ron Styles, executive director of the Saskatchewan Potash Producers Association.
These additional tax increases follow the 2017 increase to the Provincial Sales Tax as well as application of the PST to exploration and construction expenditures, both changes which have added millions of dollars in additional cost to the potash industry’s operating costs.
The Federal Carbon Tax that begins on April 1st, 2019 will further erode the competitive position of Saskatchewan producers in the world market. Competing producers in countries like Russia are not facing these cost increases and we risk losing market share to these countries that don’t offer similar “best-in-class” environment, safety or social performance as does Saskatchewan potash producers.
“When potash companies make multi-billion-dollar generational investments, as they have been doing in the past decade, it is critical that they have confidence in a predictable financial framework to make decisions in,” said Mike Durham, chair of the Saskatchewan Potash Producers Association.
Because budgets have already been set prior to the change that will be in effect April 1st, there is no transition time and money will come out of current investments planned for Saskatchewan projects, including jobs and goods and service purchases.
It is feared that the Canadian Mining Sector has lost ground to the rest of the world with respect to its competitive position to the extent that the size of the sector has declined over the past number of years with the net result being a loss of investment, jobs, economic activity, and government revenues.
The same loss of competitive position will be the result of the 2019 Saskatchewan Provincial Budget.
