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New royalty regime would stall province's economic growth and industry's competitivenessOTTAWA,
March 25, 2013 /CNW/ - As the
Quebec government prepares to table a new mining tax regime this week that would significantly heighten mining taxes and royalties, the Mining Association of
Canada (MAC) is warning that a new royalty regime would worsen the province's investment appeal with detrimental economic effects to
Canada's economy as a whole.
It is expected that this new proposed tax regime would put in place two new levies - a five per cent tax on the gross value of annual production, as well as a 30 per cent royalty on "super-profits".
Quebec is already a high tax jurisdiction in many respects, and as recently as 2010, saw the former government raise the taxes on profits to 16 per cent from 12 per cent.
"The new regime would tarnish
Quebec's reputation as a mining-friendly jurisdiction for investment," said
Pierre Gratton, MAC's President and CEO. "Moreover, from a global mining company standpoint looking to build its next project, I am concerned that there will be little distinction between
Quebec and the rest of
Canada, thus harming the country's reputation as a whole."
Competition for mining investment is fierce on a global scale.
Canada competes against other global mining countries that are equally touted for having rich mineral deposits, such as countries in
Latin America and
Africa. With so many other countries at play, a mining company will simply overlook
Canada for another mining jurisdiction considered more competitive from an investment standpoint. The ramifications would be vast, translating into a significant loss of royalties to the government, well-paying jobs for Canadians and the significant spin-off business opportunities that a mine gives to an entire community.
"This government's approach reveals a limited knowledge of the sector and the global reality in which it operates today," added Gratton. "The actions of this government go against decades of sound economic policies advanced by
Quebec governments of all political stripes, including the Parti Quebecois."
The Association minière du Quebec (AMQ) has been vocal within the province to sound the alarm of the negatives consequences that would ensue if the new royalty regime, as proposed, takes hold. According to the AMQ, the current level of taxation stemming from mining activity already provides significant economic benefits to the majority of
"The hikes are positioned as just penalizing the mining industry, whereas in reality, they put into peril the livelihoods of thousands of families in the province who rely on the industry for employment - both direct and indirect jobs. The fact is, companies will simply find somewhere else to mine," stated Josée Méthot, President of the AMQ.