An empirical study of the Saskatchewan Potash Reserve Tax

CIM Bulletin, Vol. 72, No. 811, 1979

DAVID L ANDERSON, Faculty of Administration, University of Regina

This paper explores the financial impact of the initial version of the Saskatchewan Potash Reserve Tax; first, alone; and second, in conjunction with the other taxes affecting the industry's profitability. Although the introduction of the Reserve Tax is shown to lead to a substantial increase in a hypothetical firm's effective tax burden, the more unusual outcomes frequently attributed to this levy only occur after the imposition of other non-provincial tax rulings. Despite this qualification, the results obtained suggest that the Reserve Tax undoubtedly acted as a catalyst in the polarization of attitudes during the early period of industry/government confrontation.
Keywords: Taxation, Reserve taxes, Potash industry, Saskatchewan, Mining costs, Markets.