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PotashCorp Responds

Today’s Saskatoon StarPhoenix and Regina Leader-Post cover my recent analysis of PotashCorp’s annual report.

I suggested that the company may be paying less corporate income tax to Saskatchewan than to Trinidad. PotashCorp could clear things up anytime by simply disclosing the amount of corporate tax it paid to the Saskatchewan government.

Rather than doing so, its spokesman argues that the province of Saskatchewan is not comparable to the country of Trinidad. He has a point: most Canadian corporate taxes flow to the federal government as opposed to provincial governments. That fact underscores the need for higher provincial royalties to collect a fair return on potash, a provincially-owned resource.

On royalties, today’s StarPhoenix also includes a letter from Randy Nelson pointing out that Norway’s high oil royalties have not chased offshore platforms out of the North Sea. Meanwhile, PotashCorp reported paying 2010 royalties of only $73 per Saskatchewan resident ($76.5 million/1.05 million people).

Maybe Randy and I should stop being so hard on the company. After all, its latest proxy circular (page 41) indicates that life is already getting pretty rough: “We revised our perquisites program to no longer provide country club memberships for executives beginning in 2011.”

UPDATE (March 4): Today’s StarPhoenix and Leader-Post feature more letters calling for higher potash royalties. Keep them coming Saskatchewan!

UPDATE (March 5): The Queen City delivers!

Enjoy and share:

Comments

Comment from Travis Fast
Time: March 3, 2011, 7:59 am

“We revised our perquisites program to no longer provide country club memberships for executives beginning in 2011.”

Said in the voice of Conrad Black.

You see how they behave when they know nobody will speak the word “nationalization.”

Comment from Erin Weir
Time: March 3, 2011, 8:09 am

Until fairly recently, no political leaders were talking about higher potash royalties, so we are making progress.

Comment from travis fast
Time: March 3, 2011, 12:12 pm

I know, it is just so disheartening to see how very much the discursive boundaries have narrowed since the eighties. I mean it is Saskatchewan for Pete’s sake. I guess the memory hole that is neoliberalism spares none.

Comment from Erin Weir
Time: March 3, 2011, 12:44 pm

Strangely, Saskatchewan quickly became one of the worst on this issue. Alberta’s opposition parties generally advocated higher royalties. Its Conservative government eventually made an extremely poorly-timed attempt to modestly raise them. Throughout those years, Saskatchewan suffered from a nearly complete political consensus in favour of giving away natural resources.

Comment from The Analyst
Time: March 3, 2011, 1:58 pm

This is very off-topic, but I noticed that there’s few Manitoba issues discussed on this blog (which mainly, it seems to be, speaks about Saskatchewan and BC issues). Is their any particular reason for that?

Comment from Paul Tulloch
Time: March 3, 2011, 5:52 pm

good point Travis, how can anybody from Saskatchewan fall down such a rabbit hole. I guess all those farmers are just plain used to giving away stuff from the ground. (am I in trouble yet??? Lol, okay farmers, you can throw tomatoes anytime at this central Canada boy.) However I do have a couple of big ass uncles living amongst you in Regina so watch it.

I also know somebody from Willow Bunch, who is even more dangerous. (what a cool name for a town)

Truly though, it is a weird artifact that we are witnessing, Saskatchewan being blinded by the floodlights of some corp and just eagerly giving away precious tax dollars. Are the streets paved in gold out there or something? Maybe with enough of a backlash, the company will actually disclose its taxes. Don’t count on it though. I am searching through a few of those edgar forms, maybe something will sneak out. We need a wiki leaks for corporations, and then maybe, just maybe Economic democracy may enter the discourse.

Comment from Erin Weir
Time: March 4, 2011, 2:00 am

Analyst,

I am from Saskatchewan. Marc and Iglika are based in BC.

Manitoba has no shortage of progressive economists. In fact, the U of M probably has Canada’s most progressive economics department. Manitobans are active in the PEF and I would encourage them to contribute to this blog.

Comment from The Analyst
Time: March 4, 2011, 2:11 pm

Perhaps it’s just me, but it seems that a lot of progressive economists in the Province are tied up doing rigorous studies (for academic journals or the government) or advising the provincial government. However, it seems that for every publication that relaxes Free Market assumptions (a recent study by Hugh Grant relaxed the assumption of “perfect competition” in the rental market and came to differing conclusions on second-generation rent controls in Manitoba – http://www.manitoba.ca/fs/cca/pubs/rental_report.pdf) there is a vigorous counter-campaign in the media. For instance, the Frontier Centre for Public Policy has vigorously criticized Hugh Grant, a policy analyst from the FCPP wrote a column for the Winnipeg Sun saying “another study’s needed because, as a political economist, this guy might be predisposed to the government’s statist outlook”, and some angry editorials have been written in the Winnipeg Free Press.

I am curious if the Press is any different in Saskatchewan, as I don’t regularly follow Saskatchewan-based newspapers. It looks like there has been real progress against selling off Potash Corp and for higher royalties.

Comment from Erin Weir
Time: March 5, 2011, 4:04 am

Grant’s study has also become relevant in Saskatchewan.

The FCPP has an office in Regina and gets frequent play in the local media.

The Leader-Post and StarPhoenix generally take about the same right-of-centre editorial stance as other CanWest newspapers. However, both have always been open to printing alternative views from yours truly.

Comment from George Hambleton
Time: March 5, 2011, 12:35 pm

The Sask Party government is announcing higher than anticipated revenues.

Are progressive economists eager to see the Sask Party government acquire greater revenues?

Are progressive economists eager to see the Potash Corp acquire lesser profits?

What’s the objective?

Comment from Erin Weir
Time: March 5, 2011, 1:13 pm

The objective is for the Government of Saskatchewan to collect more revenue.

Higher revenue estimates are obviously good news, but they are still far short of the objective.

The $301.5 million of potash revenue now estimated for 2010-11 is less than the government collected in 2004-05, when potash prices were about one-third of current levels.

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