New B.C. mining tax laws take effect

New streamlined and updated mining tax laws for British Columbia mines will take effect in January, 1990, Mines Minister Jack Davis recently announced.

“This simplifies administration, encourages investment in new mines and fosters improved reclamation at old ones,” he said, adding that all mines will “pay their way” fairly through all phases of the mine life-cycle.

The new tax has a “two-tier” concept, with a minimum tax based on a mine’s current operating cash- flow and a profits tax levied on its overall net revenues.

For metal mines, rates are 2% as the minimum and 13% on profits. For coal, there is a 7.5% minimum and a 17.5% rate on profits.

Davis said the new system promises some needed short-term tax relief for the province’s coal mines. He also noted that next year’s expected rise in coal prices will improve industry revenues and give the province higher returns.

The tax, imposed on the actual value of the minerals produced, reflects an operator’s ability to pay. In addition it is designed to give equal treatment to the cost of capital, whether it is raised through loans, share-issues or other sources. The minister said the tax recognizes a mine to be a diminishing asset and that reclamation must continue after mining is finished.

The new tax is forecast to be revenue neutral. For British Columbia’s operating mines, the new system means simpler administration, with annual filings replacing earlier monthly requirements.