New royalty regime would stall province's economic growth and industry's competitiveness
OTTAWA, March 25, 2013 /CNW/ - As the Quebec government prepares to table a new mining tax regime this week that would significantly heighten mining taxes and royalties, the Mining Association of Canada (MAC) is warning that a new royalty regime would worsen the province's investment appeal with detrimental economic effects to Quebec and Canada's economy as a whole.
It is expected that this new proposed tax regime would put in place two new levies - a five per cent tax on the gross value of annual production, as well as a 30 per cent royalty on "super-profits". Quebec is already a high tax jurisdiction in many respects, and as recently as 2010, saw the former government raise the taxes on profits to 16 per cent from 12 per cent.
"The new regime would tarnish Quebec's reputation as a mining-friendly jurisdiction for investment," said Pierre Gratton, MAC's President and CEO. "Moreover, from a global mining company standpoint looking to build its next project, I am concerned that there will be little distinction between Quebec and the rest of Canada, thus harming the country's reputation as a whole."
Competition for mining investment is fierce on a global scale. Canada competes against other global mining countries that are equally touted for having rich mineral deposits, such as countries in Europe, Latin America and Africa. With so many other countries at play, a mining company will simply overlook Canada for another mining jurisdiction considered more competitive from an investment standpoint. The ramifications would be vast, translating into a significant loss of royalties to the government, well-paying jobs for Canadians and the significant spin-off business opportunities that a mine gives to an entire community.
"This government's approach reveals a limited knowledge of the sector and the global reality in which it operates today," added Gratton. "The actions of this government go against decades of sound economic policies advanced by Quebec governments of all political stripes, including the Parti Quebecois."
The Association minière du Quebec (AMQ) has been vocal within the province to sound the alarm of the negatives consequences that would ensue if the new royalty regime, as proposed, takes hold. According to the AMQ, the current level of taxation stemming from mining activity already provides significant economic benefits to the majority of Quebec residents.
"The hikes are positioned as just penalizing the mining industry, whereas in reality, they put into peril the livelihoods of thousands of families in the province who rely on the industry for employment - both direct and indirect jobs. The fact is, companies will simply find somewhere else to mine," stated Josée Méthot, President of the AMQ.
The Mining Association of Canada is the national organization for the Canadian mining industry. Its members account for most of Canada's production of base and precious metals, uranium, diamonds, metallurgical coal, mined oil sands and industrial minerals and are actively engaged in mineral exploration, mining, smelting, refining and semi-fabrication. Please visit www.mining.ca.
SOURCE Mining Association of Canada (MAC)