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Replies to post #7008 on The Rising Influence of Rising Affluence
05/07/13 7:15 AM
6-May-2013 6:14 PM ET
After months of threats, the Quebec government proposed increases to the province’s mining royalty rates on Monday that are not as harsh as many in the industry feared.
The Parti Québécois introduced a taxation scheme in which companies will pay the greater of a fixed mining tax or a tax on profit. The fixed tax would be 1% for operations that have produced less than $80-million of output, and 4% for those that have produced more. The effective profit tax would start at 16% on mines with a profit margin of 35% or less, rising to as much as 22.9% on mines with a profit margin of more than 50%. By comparison, the current top mining royalty rate is 16%.
On the campaign trail last year, Premier Pauline Marois threatened more punitive measures, including a minimum 5% royalty on the value of metal production, and a 30% “super-profits” tax on earnings above an unspecified level.
…Quebec’s mining industry is not pleased about the changes, but recognized that it could have been worse if the government tried to implement all its proposals (though that was always unlikely in a minority situation). “While we’re not happy to see an increase in taxes at all given the state of the equity markets right now, from what we can tell it’s not a deep impact,” said Sean Roosen, chief executive of Osisko Mining Corp.
…The new tax regime is expected to come into force in January of next year.
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