Fixing Saskatchewan’s Potash Royalty Mess: A New Approach for Economic Efficiency and Simplicity
For a government’s fiscal program to best serve the public interest, while also ensuring sufficient public revenue collection, it has to meet three criteria: efficiency, simplicity and fairness. Unfortunately, the royalty and tax system currently in place for Saskatchewan’s robust potash-mining ind...
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| Format: | Article |
| Language: | English |
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University of Calgary
2013-02-01
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| Series: | The School of Public Policy Publications |
| Online Access: | https://dev.journalhosting.ucalgary.ca/index.php/sppp/article/view/42418 |
| _version_ | 1797754357677031424 |
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| author | Duanjie Chen Jack M. Mintz |
| author_facet | Duanjie Chen Jack M. Mintz |
| author_sort | Duanjie Chen |
| collection | DOAJ |
| description |
For a government’s fiscal program to best serve the public interest, while also ensuring sufficient public revenue collection, it has to meet three criteria: efficiency, simplicity and fairness. Unfortunately, the royalty and tax system currently in place for Saskatchewan’s robust potash-mining industry is none of these three things; it has actually reached the point of incoherence and absurdity, or a mess.
Under the current royalty and tax regime for potash producers, the tangled thicket of royalties, taxes and credits can differ between commencement dates for production, projects of different sizes, or even projects of similar size but with different profitability; it also has potash producers generally enjoying a much lighter tax burden on marginal investments than that borne by the oil and gas industry and most other non-resource industries. The result is distortions and inefficiencies, resulting in subpar investment activity, which can only stand in the way of Saskatchewan reaching its full economic potential.
That needs to change. The Saskatchewan government can implement a simpler and properly structured rent-based tax and a revenue-based royalty as minimum payment (where the royalty can be credited against the rent tax), each with a single rate and an identical tax base for all tax and royalty payers. Such a properly structured royalty and tax system can deliver improved productivity, without reducing investment incentives, resulting in a better partnership for both Saskatchewan’s industry and government in the long run.
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| first_indexed | 2024-03-12T17:32:22Z |
| format | Article |
| id | doaj.art-316a6430feb342e7ad1e56ee05135a36 |
| institution | Directory Open Access Journal |
| issn | 2560-8312 2560-8320 |
| language | English |
| last_indexed | 2024-03-12T17:32:22Z |
| publishDate | 2013-02-01 |
| publisher | University of Calgary |
| record_format | Article |
| series | The School of Public Policy Publications |
| spelling | doaj.art-316a6430feb342e7ad1e56ee05135a362023-08-04T15:53:02ZengUniversity of CalgaryThe School of Public Policy Publications2560-83122560-83202013-02-016Fixing Saskatchewan’s Potash Royalty Mess: A New Approach for Economic Efficiency and SimplicityDuanjie Chen0Jack M. Mintz1School of Public Policy, University of CalgarySchool of Public Policy, University of Calgary For a government’s fiscal program to best serve the public interest, while also ensuring sufficient public revenue collection, it has to meet three criteria: efficiency, simplicity and fairness. Unfortunately, the royalty and tax system currently in place for Saskatchewan’s robust potash-mining industry is none of these three things; it has actually reached the point of incoherence and absurdity, or a mess. Under the current royalty and tax regime for potash producers, the tangled thicket of royalties, taxes and credits can differ between commencement dates for production, projects of different sizes, or even projects of similar size but with different profitability; it also has potash producers generally enjoying a much lighter tax burden on marginal investments than that borne by the oil and gas industry and most other non-resource industries. The result is distortions and inefficiencies, resulting in subpar investment activity, which can only stand in the way of Saskatchewan reaching its full economic potential. That needs to change. The Saskatchewan government can implement a simpler and properly structured rent-based tax and a revenue-based royalty as minimum payment (where the royalty can be credited against the rent tax), each with a single rate and an identical tax base for all tax and royalty payers. Such a properly structured royalty and tax system can deliver improved productivity, without reducing investment incentives, resulting in a better partnership for both Saskatchewan’s industry and government in the long run. https://dev.journalhosting.ucalgary.ca/index.php/sppp/article/view/42418 |
| spellingShingle | Duanjie Chen Jack M. Mintz Fixing Saskatchewan’s Potash Royalty Mess: A New Approach for Economic Efficiency and Simplicity The School of Public Policy Publications |
| title | Fixing Saskatchewan’s Potash Royalty Mess: A New Approach for Economic Efficiency and Simplicity |
| title_full | Fixing Saskatchewan’s Potash Royalty Mess: A New Approach for Economic Efficiency and Simplicity |
| title_fullStr | Fixing Saskatchewan’s Potash Royalty Mess: A New Approach for Economic Efficiency and Simplicity |
| title_full_unstemmed | Fixing Saskatchewan’s Potash Royalty Mess: A New Approach for Economic Efficiency and Simplicity |
| title_short | Fixing Saskatchewan’s Potash Royalty Mess: A New Approach for Economic Efficiency and Simplicity |
| title_sort | fixing saskatchewan s potash royalty mess a new approach for economic efficiency and simplicity |
| url | https://dev.journalhosting.ucalgary.ca/index.php/sppp/article/view/42418 |
| work_keys_str_mv | AT duanjiechen fixingsaskatchewanspotashroyaltymessanewapproachforeconomicefficiencyandsimplicity AT jackmmintz fixingsaskatchewanspotashroyaltymessanewapproachforeconomicefficiencyandsimplicity |