Is Ontario Getting a Fair Share for Our Mineral Resources? – by Ramsey Hart (MiningWatch Canada – December 12, 2013)

http://www.miningwatch.ca/

An open letter To Bonnie Lysyk, Auditor General for Ontario

Bonnie Lysyk, Auditor General for Ontario

20 Dundas Street West, Suite 1530
Toronto, Ontario M5G 2C2
December 12, 2013

Dear Ms. Lysyk,

On behalf of MiningWatch Canada, please allow me to welcome you to Ontario and congratulate you on your appointment as the Auditor General for our province.Having come from Saskatchewan you are undoubtedly no stranger to mining and the
revenues the extraction of non-renewable resources can contribute to a provincial budget. As you learn more about Ontario, you may be surprised to learn that relative to Saskatchewan, Ontario has very poor system in place for recouping a fair share of the value of publicly owned minerals extracted by private mining companies.

While Saskatchewan retains 7% to 8 % percent of the value of uranium and potash in mining taxes, Ontario retains les than 2% of the value of minerals under the Mining Tax. A recent study by University of Calgary economists Chen and Mintz found that Ontario’s effective tax rate on mining including corporate and sales tax payments was second lowest in Canada at only 2 % (Saskatchewan was 11%).

We have been raising the issue of this poor return to Ontarians for the minerals extracted from the province for a number of years and were pleased to see the 2012 report of the Drummond Commission and two successive budget speeches (2012 and 2013) make commitments to reviewing the Mining Tax. However, to date no review has been released. Over a year ago we met with staff of the Ministry of Finance working on the review. We recently received an update from the Ministry and were told that the actual study has not yet begun and that the approach for the review is still being developed!

In 2009 a review by Quebec’s Auditor General found that half of the operating mines in Quebec were paying no taxes and those that paid were not paying very much. The report stimulated an important debate in Quebec and since 2009 Quebec has implemented a number of changes to its tax system that have improved the total revenues retained by the province.

We respectfully request that you use your authority as Auditor General for Ontario to undertake your own independent review of the Mining Tax and Royalty on Diamonds and evaluate whether Ontarians are getting a fair share of benefits for the extraction of our non-renewable resources. We also encourage you to examine the potential for investing non-renewable resource revenues rather than slotting them into general revenues. This has been done with great success in Norway.

A review is greatly needed given the well-justified calls for revenue sharing from First Nations and municipalities and the numerous proposed mining projects that are advancing across the province.

I would be happy to discuss our concerns and recommendations with you further if you wish.

Regards,

Ramsey Hart
Canada Program Coordinator / Co-Manager
MiningWatch Canada
CC: Premier Kathleen Wynne
Minister of Finance Charles Sousa
Leader of the Opposition Andrea Horwath
Opposition Finance Critic Michael Prue
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