A large group of mining industry people concerned about the future of flow-though funding attended a pre-Christmas rally in Val d’Or, Que., organized by the Quebec Prospectors Association. Regie Labeaume, association president, said about 800 people turned out to discuss the issue with the MP for the area, Guy St-Julien, and the provincial representative for the area, Raymond Savoie, who is also the Quebec cabinet minister responsible for mines.
Flow-through financing is a means whereby junior mining firms can raise exploration funding from investors, who are allowed certain tax deductions. Currently, an investor is entitled to a tax write-off of $1.33 for every exploration dollar spent.
Until federal finance minister Michael Wilson recently announced his latest tax reform proposals, had proposed Ottawa was reducing the currrent 33 1/3% rate of depletion to 16 2/3% on July 1, 1988, and eliminating it completely July 1, 1989. Under Wilson’s latest proposals, the 16 2/3% depletion rate on July 1, 1988, would stand, but elimination of the depletion would be pushed back six months, with flow-through ending Dec 31, 1989.
According to Labeaume, in Quebec the provincial government is considering keeping the 33 1/2% depletion rate in place until the end of 1989.
The Quebec association argues flow-through financing benefits the Canadian economy, in particular at the regional level where mining exploration has had a marked effect on local economies.
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