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.
When assessing provincial revenues from mining, one must take into account that Ontario’s mining tax is really just the tip of the proverbial iceberg with regards to the sector’s economic contribution to the province. Mining tax is paid on top of all corporate taxes, payroll taxes, sales taxes, permitting fees and other business taxes. When added up, Ontario mining companies’ tax contributions to all levels of government are more than $1 billion annually, which pays for necessities such as roads, schools, hospitals, community centres, electrical grid access for remote communities, and other public good priorities. The value of mineral production in Ontario was $11 billion in 2014.
All jurisdictions must balance the need for capital investment to develop their mineral resources with the desire to increase revenue through higher taxation. There are many models for meeting this challenge – in Ontario, we don’t risk the taxpayer funding up front by paying for infrastructure and offering competitive hydro rates. Instead, we require mining companies to take on the risk, and subsequently offer tax breaks when the project is up and running, employing and spending.
Benchmarking the cost to mine in Ontario, therefore, requires “apples to apples” comparisons. Jurisdictions with higher mining tax rates have lower electricity prices and government cost-sharing on infrastructure. A recent report indicates that exploration and mining costs are particularly inflated in the North, where companies need to invest in lacking, but essential infrastructure such as ports, power plants, winter and permanent roads, and accommodation facilities.