Senate Passes $260-Million-a-Year Bonanza for Mining, Oil and Gas

The Ethics Bill may not have passed before Parliament prorogued, but the Senate managed to pass Bill C-48, a $260 million a year give-away to the mining, oil and gas industries. MiningWatch presented to the Senate Committee on Banking November 5. Our submission is available as a PDF file.

For mining, Bill C-48:
• Reduces the mining industry's corporate tax rate by lowering it to 21% by 2007
• Removes the Resource Allowance
• Introduces a 10% Investment Tax Credit for companies based on their exploration expenses

The Bill is based on a Technical Paper published March 2003. It appears to base the recommendations on 1997 figures that indicate that mining pays only $850 million in corporate income and capital tax to the federal government and the provinces (24% to the federal government).

The paper completely ignores the long-term negative environmental, social and economic impacts of non-renewable resource development. This contradicts recommendations from the Organization for Economic Cooperation and Development, that say society's demand for goods and services will have to be met with a significant reduction in new material inputs. This can be achieved through waste prevention and reduction in the design and delivery of goods, and the recycling and reuse of existing materials stocks, rather than disposing of used materials at one end of the materials cycle and inputting newly extracted ones at the other.

Federal subsidies for the exploration and development of new mines in Canada have historically been justified because of the resulting employment and other economic benefits. However, the economic contribution of the metal mining sector, in particular, is in decline.

In 2002, Miningwatch Canada and the Pembina Institute published a report that assesses the value of public support for the metal mining industry in Canada. Data from public (government and industry) sources was compared and trends were established between 1994-95 and 2000-01.

Here are a few of the findings with respect to subsidies, jobs and GDP.
• With regard to subsidies: In 2000-01, Federal tax benefits to the industry amounted to $319 million dollars. This is up by 5% from 1994-95.
• With regard to jobs: In 2000-01, 29,248 people were employed in the metal mining industry, down 12% from 1994-5. In general Canadian industries increased jobs by 15% during this same period. By 2002, there were less than 23,400 jobs.
• With respect to GDP: The contribution of the metal mining industry to GDP in 2000-01 was 4.5 billion dollars. This is down by 8% from 4.9 billion in 1994-95.

We need a tax system that encourages alternative economic development, industrial adjustment and resource efficiency, not the continuing extraction of non-renewable resources at ever higher social, economic and environmental costs.

See the study by MiningWatch Canada and the Pembina Institute: "Looking Beneath the Surface: An assessment of the value of public support for the metal mining industry in Canada", published October 2002.