With an overwhelming emphasis on reducing expenditures, this week's Ontario budget misses an important opportunity to increase provincial revenues from the mining sector. When compared with other Canadian jurisdictions, Ontario has the lowest corporate tax rate for mining and recoups the lowest share of the value of mineral production. The Drummond Report recommended removing the "Resource Credit" that lowers the corporate tax rates and reviewing the Ontario Mining Tax. Today's budget does neither, giving up hundreds of millions of dollars in potential revenue.
The Ontario Mining Tax is a royalty payable to Ontario on the profits of mining that is meant to compensate the province for the extraction and sale of publicly owned non-renewable resources. The tax rate is 10 per cent of profits but "remote" mines only pay half of that and also qualify for a 10 year tax holiday. The total revenue generated from the mining tax in 2010 was $82 million (Entrans 2011) on mineral production worth $5.58 billion (NRCan 2011) or 1.5 per cent of the total value of production. The province also has a diamond royalty but the one operating diamond mine, Victor's DeBeers Diamond mine has not yet had to pay it. Nor has DeBeers ever paid corporate taxes in Ontario (see DeBeers' Reports to Society).
If Ontario were to reform its Mining Tax to recoup on average a modest five per cent of the gross value of mineral production, there would be an increase in $200 million a year based on 2010 production. With the increased prices for gold and other minerals mined in Ontario, the actual revenues could be considerably higher. Not enough to erase the deficit but not exactly chump change and enough to keep a few schools open.
The Ontario Mining Association has argued that comparisons with other jurisdictions aren't fair as Ontario doesn't subsidize road and electrical infrastructure like some other regions (notably Quebec) but much of the mineral production in Ontario is in areas like Timmins, Sudbury and Red Lake that have well established infrastructure. And don't forget, remote mines currently benefit from both the reduced rate and tax holiday to compensate for costs of infrastructure.
Because most of the mines in Ontario are operated by multinationals, and due to the complexity of corporate tax laws calculating potential gains from the elimination of the Resource Credit, it is not within our present means.
If Ontario were to take a look at reforming the Mining Tax it would join other jurisdictions around the world that are starting to question the low return on giving up non-renewable resources for the profit of mining companies. In Australia a super profit tax has recently been introduced and Quebec has also undergone a reform of its royalties that have made revenues triple from an average of two per cent in 2007, 2008 and 2009 to six per cent of the gross value of mineral production in 2010.
Ring of Fire, again
For the third year running, the budget also references the proposed chromite, nickel and copper developments in the Ring of Fire area of northern Ontario. There is, however, no commitment to funds for reviewing the developments, consultation with First Nations, baseline studies, etc. Past budgets have established an advisory council and secretariat but the public is left to wonder what these bodies are doing and what they have accomplished as there has been no reporting on their activities, at least none that I can find.
Original Article
Source: rabble.ca
Author: Ramsey Hart
The Ontario Mining Tax is a royalty payable to Ontario on the profits of mining that is meant to compensate the province for the extraction and sale of publicly owned non-renewable resources. The tax rate is 10 per cent of profits but "remote" mines only pay half of that and also qualify for a 10 year tax holiday. The total revenue generated from the mining tax in 2010 was $82 million (Entrans 2011) on mineral production worth $5.58 billion (NRCan 2011) or 1.5 per cent of the total value of production. The province also has a diamond royalty but the one operating diamond mine, Victor's DeBeers Diamond mine has not yet had to pay it. Nor has DeBeers ever paid corporate taxes in Ontario (see DeBeers' Reports to Society).
If Ontario were to reform its Mining Tax to recoup on average a modest five per cent of the gross value of mineral production, there would be an increase in $200 million a year based on 2010 production. With the increased prices for gold and other minerals mined in Ontario, the actual revenues could be considerably higher. Not enough to erase the deficit but not exactly chump change and enough to keep a few schools open.
The Ontario Mining Association has argued that comparisons with other jurisdictions aren't fair as Ontario doesn't subsidize road and electrical infrastructure like some other regions (notably Quebec) but much of the mineral production in Ontario is in areas like Timmins, Sudbury and Red Lake that have well established infrastructure. And don't forget, remote mines currently benefit from both the reduced rate and tax holiday to compensate for costs of infrastructure.
Because most of the mines in Ontario are operated by multinationals, and due to the complexity of corporate tax laws calculating potential gains from the elimination of the Resource Credit, it is not within our present means.
If Ontario were to take a look at reforming the Mining Tax it would join other jurisdictions around the world that are starting to question the low return on giving up non-renewable resources for the profit of mining companies. In Australia a super profit tax has recently been introduced and Quebec has also undergone a reform of its royalties that have made revenues triple from an average of two per cent in 2007, 2008 and 2009 to six per cent of the gross value of mineral production in 2010.
Ring of Fire, again
For the third year running, the budget also references the proposed chromite, nickel and copper developments in the Ring of Fire area of northern Ontario. There is, however, no commitment to funds for reviewing the developments, consultation with First Nations, baseline studies, etc. Past budgets have established an advisory council and secretariat but the public is left to wonder what these bodies are doing and what they have accomplished as there has been no reporting on their activities, at least none that I can find.
Original Article
Source: rabble.ca
Author: Ramsey Hart
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