PERSPECTIVE: Mining taxes, royalties near 2007-08 levels

The financial meltdown that began four years ago had a devastating impact both people and institutions around the globe. The effects are still being felt, for example in the shaky economies of Greece, Spain, Italy and many others. The prices of...

The financial meltdown that began four years ago had a devastating impact both people and institutions around the globe. The effects are still being felt, for example in the shaky economies of Greece, Spain, Italy and many others. The prices of major commodities dipped, affecting the bottom lines of mining companies large and small.

Now comes news from the Mining Association of Canada indicating that mining industry payments to Canadian provincial and federal governments are almost at the peak level reached in 2007 and 2008. MAC’s report, prepared by ENTRANS Policy Research Group, found payments reached an estimated $9 billion last year, when mining taxes and royalties, corporate income taxes and personal incomes are considered together.

"The increase in payments made to federal and provincial governments last year is directly related to the mining industry's economic strength during this period," said Pierre Gratton, MAC's president and CEO. "Despite fiscal policy changes, notably the reduction in the federal corporate tax rate in 2011, payment levels were buoyed by generally higher metal prices and increased production."

Key findings of the report include:

  • Total payments of $9 billion in 2001.
  • Royalty and mining tax payments increased by about $700 million over last year, with most of the increase coming from Alberta, Saskatchewan, Newfoundland and Labrador, and Ontario.
  • The mineral sector has contributed $69 billion to government treasuries over the past 10 years -$30 billion to federal and $39 billion to provincial coffers.

MAC pointed out that Alberta and Saskatchewan accounted for the largest portion of royalties and mining taxes. Their share was 64% thanks to the production of bitumen, coal, potash and uranium. The numbers for Newfoundland and Labrador rose 70% last year over the previous one due to strong iron and nickel prices, plus higher production rates at Vale’s Voisey’s Bay nickel operation. Annual revenue more than doubled in Ontario to $180 million, likely due to stronger copper and gold prices.

"The strength of the study is that it measures one of the significant economic contributions of the Canadian mining industry both nationally and regionally," said Gratton. "Canadians from coast to coast benefit from a strong, competitive mining industry that supports critical government services such as health care, education and skills training, as well as creates hundreds of thousands of well paying jobs."

To view the report, please visit Mining.ca.

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