rabble blogs are the personal pages of some of Canada's most insightful progressive activists and commentators. All opinions belong to the writer; however, writers are expected to adhere to our guidelines. We welcome new bloggers -- contact us for details.

Ontario government misses opportunity to increase revenues from mining

Please chip in to support more articles like this. Support rabble.ca in its summer fundraiser today for as little as $1 per month!

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.

 

 

 

 

Thank you for reading this story…

More people are reading rabble.ca than ever and unlike many news organizations, we have never put up a paywall – at rabble we’ve always believed in making our reporting and analysis free to all, while striving to make it sustainable as well. Media isn’t free to produce. rabble’s total budget is likely less than what big corporate media spend on photocopying (we kid you not!) and we do not have any major foundation, sponsor or angel investor. Our main supporters are people and organizations -- like you. This is why we need your help. You are what keep us sustainable.

rabble.ca has staked its existence on you. We live or die on community support -- your support! We get hundreds of thousands of visitors and we believe in them. We believe in you. We believe people will put in what they can for the greater good. We call that sustainable.

So what is the easy answer for us? Depend on a community of visitors who care passionately about media that amplifies the voices of people struggling for change and justice. It really is that simple. When the people who visit rabble care enough to contribute a bit then it works for everyone.

And so we’re asking you if you could make a donation, right now, to help us carry forward on our mission. Make a donation today.

Comments

We welcome your comments! rabble.ca embraces a pro-human rights, pro-feminist, anti-racist, queer-positive, anti-imperialist and pro-labour stance, and encourages discussions which develop progressive thought. Our full comment policy can be found here. Learn more about Disqus on rabble.ca and your privacy here. Please keep in mind:

Do

  • Tell the truth and avoid rumours.
  • Add context and background.
  • Report typos and logical fallacies.
  • Be respectful.
  • Respect copyright - link to articles.
  • Stay focused. Bring in-depth commentary to our discussion forum, babble.

Don't

  • Use oppressive/offensive language.
  • Libel or defame.
  • Bully or troll.
  • Post spam.
  • Engage trolls. Flag suspect activity instead.