Mining Tax Incentives Are Good For Canada

In Canada, the economic climate for mining is still warm, but a noticeable chill set in last November when the Government published a White Paper on tax reform known as the Carter Report. Moreover, this chill could drop to a freeze injurious to the whole Canadian economy if two of the proposals in the Carter Report are adopted. The offending suggestions call for an end to (1) the depletion allowance and (2) the three-year tax holiday for new mines. Both of these tax incentives have played a major role in the postwar development of the Canadian economy and will, if undisturbed, play an even more important role in the future. The fact that they have worked and worked well is evident from the record. Fruits of an Industrial Beanstalk Excluding fuels, the value of Canadian mineral production was just under $3 billion in 1968-almost nine times as much as in 1946. With fuels included, the figure is $4.25 billion, or almost ten times as much as in 1946. Proportionately, this growth far exceeds that of Canada's manufacturers or of her economy as a whole. Table I traces the overall mineral production growth by principal products. Of particular interest here are petroleum, iron ore, natural gas, sulfur and potash, the combined production of which has grown from little or nil to a point where it now accounts for more than 40% of Canada's mineral output.