B.C. Mines Minister wants to abolish mining royalties

British Columbia’s Mines Minister Jack Davis is arguing for a level playing field on taxation and freer markets for the mining industry.

Speaking at the B.C. Mining Association annual meeting, Davis said he strongly supports abolishing mining royalties, in particular the Mineral Resource Tax and Mining Tax.

“These are unusual taxes which were introduced at a time when the mining industry had breaks (such as depletion allowances) which it doesn’t have any more,” Davis said.

“It is very important that governments show they are prepared to treat the mining industry the same as other industries — not subsidized but not penalized.”

Because of these royalties, the mining industry pays much more in the way of non-profit-related taxes than do other industries. Last year, coal producers paid $35 million and metal mines in B.C. paid $7 million in royalty taxes.

Davis said he has proposed the tax reform to cabinet on several occasions but he expects it could take a couple of years before the tax is repealed.

He supports free trade and told delegates that, assuming we can compete, our markets will be assured for decades.

“Governments must be careful not to subsidize industries involved in free trade with the U.S. We would be concerned if the U.S. government engaged in propping up industry on the other side of the line.” But government can lower income and corporate tax rates, and assist with transportation and providing infrastructure, Davis said.

He noted a return to optimism for the mining sector, and pointed to a record $150 million exploration expenditures in B.C. in 1987 and over 100,000 new claims.

“Successful exploration is turning up mines — mostly precious metal,” he said, adding that there are 25 metal mine proposals entering the provincial government’s mine development process.

Mining Association Chairman Wayne Lenton echoed Davis in his call for a reform of provincial mining taxes and royalties.

“Significant increases in waste management permits, water usage charges and various other charges have been imposed on the industry,” Lenton said.

“Perhaps the biggest blow to industrial taxpayers was the change to property assessment procedures announced in September and passed into law in December. This has the very real potential of a further increased tax load.”