Jack Mintz – Ontario Needs More Mining Revenue

Professor Jack Mintz
Professor Jack Mintz
Professor Jack Mintz
Professor Jack Mintz

THUNDER BAY – Ontario has been re-vamping its Mining Act. However Professor Jack Mintz states that “Ontario’s system is redundant, expensive and wasteful.” That the result after a review of the mining-tax regimes across the country by Duanjie Chen and Jack Mintz of The School of Public Policy at the University of Calgary.

In an interview with NetNewsLedger, Mintz states, “Ontario needs clearer, and more easily understood rules. The province of British Columbia has a good set of rules in place, and Ontario should look at adopting similar rules”. Mintz states that jurisdictions around the world are all coming up with similar rules for mining, and Ontario needs to be in line.

Mintz also states that Ontario needs to think more carefully about where the province is going. “The province should be looking to raise mining revenues,” stated Mintz.

“The province of Ontario ended its fiscal year with a $12 billion deficit.  Ontario may be in worse fiscal shape than well-known basket cases like the state of California.   One would think that a province so financially debilitated would want to avoid giving complex and unnecessary tax breaks to resource companies”. 

Ontario Needs to Improve Mining Rules

Ontario is not the only province that needs to improve its mining-tax regime. In every province except New Brunswick, mining firms enjoy a lower marginal rate for taxes and royalties than for non-resource companies. The result has been a distortion of investment toward mining projects that might otherwise be economically inefficient.  Even in major oil-producing provinces, such as Alberta, Saskatchewan and Newfoundland, mining investment benefits from larger tax incentives than oil and gas investment. The reasons for favouring the mining of metal over the mining of oil are unclear and economically unjustifiable.  

According to co-author Jack Mintz, “Provincial mining-tax systems are distortionary and complex, resulting in sub-par profitability due to excessive investment in certain tax-favoured assets. Both the federal and provincial corporate income tax regimes need to be overhauled.”

Mining Tax rates

The federal government has begun making changes to its tax policies to scale back preferential and irrational inducements for mining investment, but Ottawa’s efforts to modernize Canada’s mining-tax structure can only go so far, when provinces continue to rely on overly complex and distortionary tax systems. The next step for Canada’s mining-tax system requires provinces to eliminate preferential mining tax breaks. Provincial treasuries cannot afford it, and neither can the Canadian economy as a whole. 

Mintz sees two steps that can be taken by provinces, “First, the special tax credit and the generous depreciation allowance for mining investment given to the mining industry should be eliminated gradually. And second, the provincial mining-tax systems should be reformed so as to create a rent-based cash-flow tax, which would strike an adequate split of the economic rent between the government and miners while fully recognizing investment risks.”

NetNewsledger will be following this piece up shortly with comment from the Ontario Government.

News at the Speed of the Internet ©

Enhanced by Zemanta
Previous articleNew Kid on the Block – Silver Birch Restaurant
Next articleMinister Gravelle “It is all about the right balance”
NetNewsledger.com or NNL offers news, information, opinions and positive ideas for Thunder Bay, Ontario, Northwestern Ontario and the world. NNL covers a large region of Ontario, but are also widely read around the country and the world. To reach us by email: newsroom@netnewsledger.com Reach the Newsroom: (807) 355-1862