Potash giving cash boost to tight Saskatchewan budget
$800M expected this year, twice as much as previous budget
The Saskatchewan government is revamping the way it gets money from the potash industry — meaning extra money now and maybe more in years to come.
On budget day, March 18, Finance Minister Ken Krawetz, announced a change to the way the potash industry uses tax deductions for capital expenses.
The bottom line is that the treasury will take in about $148 million more in potash revenue that would otherwise be deferred to another year.
Combined with higher revenues due to higher potash prices, the treasury is expecting to take in close to $800 million this year, compared to about $400 million in the 2014-15 budget.
According to Krawetz, the change to the potash rules this year is only an interim step that will be followed by a review of the entire potash royalty and taxation regime.
From the province's perspective, the extra cash from potash takes some of the sting out of the loss in oil revenue. The province expects to take in $903 million in oil revenue in 2015-16, compared to the $1.6 billion projected in 2014 when oil prices were high.
PotashCorp not happy
A major player in the industry, PotashCorp, issued a statement Wednesday expressing disappointment with the government's move, claiming it will reduce its 2015 pre-tax earning by up to $100 million.
"PotashCorp is disappointed in the announcement," Jochen Tilk, president and CEO of PotashCorp, said in the statement. "While we understand the difficult revenue situation facing the government, we are nearing completion of a $6 billion investment in Saskatchewan which was based on the existing tax structure remaining in place."
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