This article was provided by the Ontario Mining Association (OMA), an organization that was established in 1920 to represent the mining industry of the province.
Personal income tax payments by mining industry employees across Canada increased 15% to $2.3 billion in 2012 from about $2 billion in 2011. The growth is related to the industry’s role as a major, high-paying employer and the rise in mineral sector employment by about 6,700 jobs, according to the recently released Mining Association of Canada (MAC) study, “Payments to Governments by the Canadian Mineral Sector 2003 – 2012,” prepared by the ENTRANS Policy Research Group.
The study examines royalties paid by mineral producers, corporate income taxes paid by mining companies and personal income taxes paid by direct industry employees. ENTRANS estimates that during the past 10 years, the mining sector made payments of more than $71 billion to Ottawa and provincial governments.
“This impressive amount of more than $70 billion over the past decade also underscores the importance of mining in Canada as both a major employer across the country and significant contributor to the Canadian economy,” said MAC President Pierre Gratton. “The royalties, taxes and other payments made to governments by the industry ultimately go towards supporting critical government services like health care, education and the building of infrastructure.”
While the level of personal income tax paid by employees grew in 2012, royalty payments and corporate income tax were lower. In 2012, industry payments to governments totaled $6.6 billion, which is down from $8.3 billion in 2011. The high water mark for mining sector tax payments between 2003 and 2012 was $10.5 billion in 2008. Global recession pushed this level down to $4.9 billion in 2009.
The $6.6 billion in tax contributions by mining in 2012 were made against a challenging backdrop for the sector. “The prices of virtually all major minerals declined, many by more than 10%,” said ENTRANS. “The overall Scotiabank Index (for commodities) registered an 8.2% reduction.” Overall, the operating profit level of the industry showed decline in 2012, compared with 2011.”
A rough split of the $71 billion in taxes contributed by mining in the past decade would see $30 billion going to the federal government and $41 billion going to provincial governments. “These are not insignificant sums representing, respectively, about 1.3% of federal and 1.9% of all own-source provincial revenues for the period,” said ENTRANS. “For mineral-rich provinces, the percentage is likely considerably higher.”
The figures in the ENTRANS report on mining industry payments to the federal and provincial governments are conservative. Not counted in the study are mining company payments to municipal governments, such as property taxes, and mineral-related payments made to, or collected on behalf of, First Nations.
Employment taxes such as company contributions to the Canada Pension Plan and Employment Insurance are also not included in the totals. In addition, for confidentiality reasons, the 13% diamond royalty paid to the Ontario government by De Beers Canada’s Victor Mine, which is the only operating diamond mine in the province, is not included.
According to Natural Resources Canada, the mining sector nationally accounts for one of every 41 Canadian jobs. The average weekly pay for a mining worker in 2012 was $1,599, which surpassed the earnings of workers in forestry, manufacturing, finance and construction.