Current trends in the tax environment for Canadian mining operations

"As the 1981 annual reports of Canadian mining companies one by one see the light of day, it becomes clear that softer metal prices and rising costs are the main problems which beset the industry today. These problems are certainly not lightened by that familiar monster lurking in the shadows-taxation! Recent taxation trends in Canada, and the existing tax regimes for the mining industry, continue to be a major bugaboo.This examination by ""Tax Notes"" of the impact of current taxation trends on the mining industry is based on a speech delivered recently by Robert D. Brown, senior tax partner of Price Waterhouse, Canada, to the annual meeting of the American Institute of Mining, Metallurgical and Petroleum Engineers in Dallas.IntroductionThe purpose of this paper is to tell a story-and it is a story with a moral. The first thing to recognize is that, with depressed metal prices and weakening western economies, high taxes, in and of themselves, are not really the cause of the Canadian mining industry's present doldrums. However, the character and level of mining taxes in Canada has had a profound influence on the development of the industry over the past decade, and the expectations of what the future holds for mining men in Canada will equally play an important role in the future development of the Canadian industry. Our tax system has, in the past, served as a negative and destabilizing influence in the mining industry: it has contributed to a major short-fall in investment commitments and hence in the contribution which the mining industry can make to the Canadian economy, and the adverse effect on the industry of previous high marginal tax rates was made far worse by the confusing, contradictory and perverse nature of the tax system itself."