Quebec Raises Mining Taxes In The Province
What is worse – getting slapped with a tax that is lower than was expected or getting slapped with any tax?
Obviously, no business wants to be burdened with additional taxes, but it appears there is a new taxation scheme targeted at Quebec mining operations with the goal of bringing additional (and much needed) revenues for the Quebec government that can’t be avoided. The good news is that this negotiated plan appears to be a lot less severe than the one proposed on the campaign trail last year.
The goal of the next taxation plan is to collect upwards of $1.8 billion in revenue over the next 12 years. To get there the mining industry has a few options. Companies can opt for either fixed mining taxes or a tax on profit. With the fixed tax option a company would pay 1% on operations that have generated less than $80 billion of product. For those companies who have produced more the tax would jump to 4%.
With the profit tax option, the tax would be 16% on mines that reaped a profit margin of less than 35%. Any profit margin that jumps to more than 50% will have to pay as much as 28% in additional taxes. Clearly, this is all going to keep the mining company accountants busy crunching the numbers.
All of this doesn’t seem as harsh as the original proposal put forth by Premier Pauline Marois when she was running for office. That plan included a sweeping 5% royalty on metal production, and a 30% hit on what was referred to as any “super-profits.” If all goes according to plan there would be a boost into the government’s coffers of $370-million in 2015. That would be up from the projected $320-million.
The early consensus from the mining industry appears to be, “It could have been worse but it’s still a tax.” The new tax plan is expected to be signed into law and go into effect in January.
