Companies mining potash in Saskatchewan can expect to see refunds for taxes they paid on potash sales they didn’t make during the 2009 tax year.
The provincial government, in its third-quarter financial report Tuesday, reports that higher oil revenue and taxes generated from increased income growth have offset a once-spectacular potash resource revenue forecast that “is now negative.”
The potash sector saw a dramatic tumble in sales volumes in 2009, as users of potash fertilizer balked at the price and deferred their potash purchases and applications.
At the end of March last year, the potash industry made installment payments equal to 25 per cent of their full calendar year profit estimates. Those estimates have turned out “too optimistic” and the province must now refund those payments.
The refunds will exceed actual potash revenues collected this year by $203.9 million, the province said.
“This is the first time we have seen potash drop to a negative figure, but I’m pleased our diverse economy has managed to lessen the impact,” provincial Finance Minister Rod Gantefoer said in a release Tuesday.
The report notes that spending decreases in the province’s agriculture, highways and finance departments and debt servicing costs have partially offset higher expenses in health, social services and municipal affairs.
Gantefoer, the MLA for Melfort, plans to deliver the 2010-11 provincial budget on March 24.
The opposition NDP’s finance critic on Tuesday ripped the overpayment as an example of the governing Saskatchewan Party’s “reckless and irresponsible management of the province’s finances.”
Regina MLA Trent Wotherspoon claimed Tuesday that the government had been misleading the public and hid the advance potash payments until now. The advance, he said, was taken by the government during a year of “unprecedented revenue.
“Only when (Premier Brad) Wall is being forced to write cheques back to the potash companies did the people of Saskatchewan learn about this unprecedented move and the extent of his government’s stupidity and greed.”