Newfoundland amends Act: Letters to the Editor

The article “Newfoundland doubles tax on claims” (T.N.M., Jan.21/91), particularly the headline, gave an unclear and incorrect impression of the purpose and effect of recent amendments to the Mineral Holdings Impost Act. The amendments to the Impost Act did not double the tax on claims; in fact there is no tax on mineral claims in Newfoundland and Labrador.

The annual tax rate was doubled on “mineral holdings.” These holdings are grants or long-term leases of mineral rights that have been held for 30-100 years. Most of the remaining mineral holdings have no expiry date; and without the Mineral Holdings Impost Act, there would be no requirement for any mineral exploration work to be done on these properties. When these amendments became law, March 23, 1990, the total areas of all mineral holdings was about 650,000 hectares; 1.75% of the total area of the province.

The mineral holdings that remain are relatively small compared with the total area of the province. However, by virtue of the reasons for which the mineral holdings were originally granted and the “distillation” effect of the Impost Act over the past 13 years since enacted, the remaining mineral holdings are, for the most part, areas with very good mineral potential.

The purpose of increasing the tax rate was to encourage owners of these properties to increase the levels of exploration activity on the properties because the tax can be reduced in direct proportion to exploration work undertaken and reported on a mineral holding. The tax rate was doubled to $6 from $3 per hectare for 1990 and will increase to $12.50 by 1997 when the tax rate/work requirement on areas subject to the Impost Act will be equivalent to the first-year assessment work requirement for claims held under The Mineral Act.

The amendment to the Mineral Holdings Impost Act is not a tax grab. The tax could only generate a maximum of $3.9 million ($6×650,000 hectares). A large proportion of the 650,000 hectares subject to the tax are explored each year and thereby relieved from the tax. Also a large area subject to the Impost Act has recently been surrendered and will in the near future be made available for competitive staking and exploration under The Mineral Act.

Ken Andrews, P. Geo.

Director, Mineral Lands Division

Department of Mines and Energy

St. John’s, Nfld.