Latest provincial budget put additional burdens on mining – Ore

The situation in Quebec has been rather quiet on the taxation front in the past year, except for the federal Goods and Services Tax (GST), where partisanship has stirred controversy. The 7% GST is now under study in the Senate and should become effective in January, 1991. It replaces the 13.5% sales tax on manufactured goods and the 9% tax on construction materials. Ultimately, this tax will only affect the consumer. As for businesses and companies, they will be credited for taxes collected on their sales, and any surplus will be refundable.

It should be noted that the fact of having lowered the GST from the planned 9% to 7% means an increase in the tax on capital. Overall, the GST will foster exports and, at the same time, encourage industries such as ours.

The recent provincial budget in Quebec includes several additional costs for the industry: the increased surtax on income taxes from 12% to 15%, the increase of the tax on capital, the inclusion of ore reserves in the calculation of the tax on capital, the reduction of the rate of interest by 2% on refunds to corporations as well as an additional delay that the government grants itself before paying interest on reimbursements, and especially the increased contribution of employers to the health services fund, from 3.36% to 3.45%.

To all these additional taxes the industry will bear, we must add school and municipal taxes that will rise owing to the decision by the provincial government to transfer to municipalities and school boards Quebec’s shortfall created by a cut in federal transfer payments. Single- industry communities will be hit hard. Moreover, in January, 1991, a provincial GST will be tacked on to the federal GST, but here again consumers will pay the tab.

Finally, as regards to the environment, we are keeping a close eye on the study undertaken by a federal-provincial committee to set up a private fund to restore mining sites. The principle proposed would make each company financially responsible for its own mines. Contributions to a private fund would be deductible for purposes of income tax and mining duties, not through privilege, but by right, since it is truly a matter of operational cost. The most recent information we have received indicates that the obligation to restore mining sites will be prescribed by law or regulation before the tax policy is confirmed. We have approached the Quebec government in this matter to speed up the project. It should be pointed out that Ontario and British Columbia are a way ahead of us.005 0000,0506 Claude Drouin is general manager of the Quebec Mining Association. This excerpt is published in the association’s Annual Report 1989-90.