Ontario to Mine for More Revenue
Last weekâ€™s provincial budget promised a mining sector review â€œto ensure Ontario receives fair compensation for its non-renewable resources,â€ a proposal advanced by this blog and the United Steelworkers before appearing as a Drummond recommendation.
The relevant budget section begins with the following observation: â€œOntario has the highest value of mineral production of any province or territory in Canada.â€ Similarly, this blog had noted: â€œOntario has the most valuable mineral production of any Canadian province or territory.â€
It also noted that Ontarioâ€™s budget typically lumps the Mining Tax together with â€œOther Taxes.â€ Last weekâ€™s budget at least disclosed that â€œOntario collected approximately $140 million in mining tax in 2010â€“11.â€
That significantly exceeds the $82 million reported by the Mining Associationâ€™s own study (Table 2), which I had previously quoted. Itâ€™s also worth noting that the budgetâ€™s â€œRoyaltiesâ€ line, $145 million in 2010-11, includes the Ontario diamond royalty and some revenue from quarries. However, I am told that it mostly comprises water and stumpage fees.
A more detailed breakdown of resource revenue is still needed. (Ironically, the provincial budget featured a whole section on â€œtransparency.â€) However, the available information suggests that Ontario collected around $200 million of mineral revenue in 2010-11.
The value of minerals extracted is also rising. I had previously cited Natural Resources Canadaâ€™s 2010 figure of $8.1 billion for Ontario. Last weekâ€™s provincial budget reported a 2011 estimate of $10.7 billion. So, it might have been around $9 billion for the 2010-11 fiscal year.
In conclusion, resource companies apparently paid about $200 million to extract about $9 billion of minerals from Ontarioâ€™s mines and quarries. A 2% return is less bad than the 1% I had estimated before the budget. But as one of northern Ontarioâ€™s favourite daughters would say, â€œThat donâ€™t impress me much.â€
Bring on the review!
UPDATE (April 4): Interviewed on CityNews and BNN (video)