Closing Potash Tax Loopholes
NDP leadership candidate Erin Weir is proposing to collect a fair return from the province’s potash by closing loopholes that allow corporations to avoid paying the existing Potash Production Tax.
“The people of Saskatchewan can collect almost half a billion dollars of additional revenue by closing loopholes in the Potash Production Tax system without changing any royalty or tax rates,” said Weir. “I would allow potash companies to immediately write off every dollar they actually invest in Saskatchewan, but stop giveaways that are not linked to new investment.”
Specifically, he would end the indefinite holiday that exempts all tonnage above the average sold in 2001 and 2002 from profit tax, scale back the inflated 120% investment writeoff to 100% of the amount actually invested, stop the subtraction of Crown royalties from Potash Production Tax, and remove the Saskatchewan Resource Credit. As outlined in the accompanying backgrounder, these measures would increase annual provincial potash revenues by $475 million, partly at the expense of federal revenues.
“We can’t just call for an open-ended ‘review’ of potash royalties, which leaves us open to attack by the Sask. Party and to lobbying by potash companies,” observed Weir. “We need to be specific about what’s wrong with the existing system and how we would improve it.”
Weir has a decade-long track record of consistently advocating a better return from Saskatchewan’s natural resources. When industry and resources minister Eric Cline created these loopholes for potash companies in 2003, Weir responded in The Commonwealth that these loopholes “place business interests ahead of the public interest and run contrary to social democratic values.”
He is also proposing a provincial savings fund for a portion of non-renewable resource revenue. “I agree with Premier Wall that, as a matter of accounting, it makes sense to pay off the existing provincial debt before creating a new savings fund,” said Weir. “But we need to collect a better return from the depletion of our non-renewable resources in order to pay down debt and start saving for future generations.”
Today’s measures provide a net increase of $420 million in annual provincial revenue. Because resource royalties are deductible in calculating corporate income tax, the additional $475 million of potash revenue would reduce provincial corporate taxes by $55 million and federal corporate taxes by $70 million. Bottom-line corporate profits would decrease by $350 million between the three major potash companies.
Erin Weir Campaign Blog
“The people of Saskatchewan can collect almost half a billion dollars of additional revenue by closing loopholes in the Potash Production Tax system without changing any royalty or tax rates,” said Weir. “I would allow potash companies to immediately write off every dollar they actually invest in Saskatchewan, but stop giveaways that are not linked to new investment.”
Specifically, he would end the indefinite holiday that exempts all tonnage above the average sold in 2001 and 2002 from profit tax, scale back the inflated 120% investment writeoff to 100% of the amount actually invested, stop the subtraction of Crown royalties from Potash Production Tax, and remove the Saskatchewan Resource Credit. As outlined in the accompanying backgrounder, these measures would increase annual provincial potash revenues by $475 million, partly at the expense of federal revenues.
“We can’t just call for an open-ended ‘review’ of potash royalties, which leaves us open to attack by the Sask. Party and to lobbying by potash companies,” observed Weir. “We need to be specific about what’s wrong with the existing system and how we would improve it.”
Weir has a decade-long track record of consistently advocating a better return from Saskatchewan’s natural resources. When industry and resources minister Eric Cline created these loopholes for potash companies in 2003, Weir responded in The Commonwealth that these loopholes “place business interests ahead of the public interest and run contrary to social democratic values.”
He is also proposing a provincial savings fund for a portion of non-renewable resource revenue. “I agree with Premier Wall that, as a matter of accounting, it makes sense to pay off the existing provincial debt before creating a new savings fund,” said Weir. “But we need to collect a better return from the depletion of our non-renewable resources in order to pay down debt and start saving for future generations.”
Today’s measures provide a net increase of $420 million in annual provincial revenue. Because resource royalties are deductible in calculating corporate income tax, the additional $475 million of potash revenue would reduce provincial corporate taxes by $55 million and federal corporate taxes by $70 million. Bottom-line corporate profits would decrease by $350 million between the three major potash companies.
Erin Weir Campaign Blog
