3 Min Read
* Province may impose resource transfer tax on BHP -Wall
* Tax could be in the region of C$3 bln to C$6 bln
* BHP says tax proposal is strange and unnecessary (In U.S. dollars unless noted)
By Rod Nickel and Euan Rocha
REGINA/TORONTO, Oct 21 (Reuters) - Saskatchewan may consider imposing a resource transfer tax on BHP Billiton (BHP.AX) if Ottawa approves its proposed takeover of provincial crown jewel Potash Corp (POT.TO), Saskatchewan's Premier Brad Wall said on Thursday.
Wall, speaking in Regina, said his government is strongly opposed to BHP's $39 billion hostile offer and that the takeover would offer no "net benefit" to Canada, or the western province of Saskatchewan, which is home to almost all of the country's potash industry. [ID:nN2199148]
The premier called on Ottawa to reject the proposed deal, which is currently being reviewed under the Investment Canada Act. The act allows the government to block any takeover it does not deem to be a "net benefit" to the country.
Speaking later with reporters, Wall said the provincial government may levy a C$3 billion to C$6 billion resource transfer tax on BHP, if Ottawa approves the takeover.
"We have to get that right number to make sure that the revenue of Saskatchewan is protected," he said in reference to provincial concerns that a takeover would result in revenue losses, due to the structure of the current royalty regime. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For other BHP-Potash stories [ID:nN22340110] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Andrew Mackenzie, the head of BHP's non-ferrous division, was surprised and expressed dismay on the tax proposal.
"I think having a single tax, on a single company, on a single deal, is somewhat strange. And I think it is unnecessary because we will structure the deal such that the province will have no negative tax effect. So why would you do that?" Mackenzie said in an interview with Reuters.
BHP has offered to structure any takeover in such a manner that it will not affect either provincial royalty revenues, or its take on corporate income taxes.
Mackenzie, who is in Ottawa discussing the proposed deal with federal regulators, said he is willing to restart talks with Saskatchewan at any time.
"I think this is a really special offer. These are normally benefits that one would get in any kind of acquisition ... But, potash is special to Saskatchewan. It's a big deal, and as a consequence we are prepared to make a special allowance in this case and forgo many of those up-front tax benefits that would normally be available," Mackenzie said. (Editing by Rob Wilson)