Mining Taxation and Infrastructure

Mining is claimed to be unique among industries owing to its dependence on exploration for its existence, the need to operate in remote, inhospitable areas, the vast capital sums required for development, the need to pay royalties regardless of profitabil- ity, the wide swings in prices for many of its products, the finite life of each-mineral deposit, its susceptibility to criticism by environmentalists, its dependence on export markets and sensitivity to' cost and exchange rate fluctuations, the uncertainties inherent in most mining legislation, pressures to grant mineral rights to aboriginal communities and the burden of having to finance its own infrastructure. The special problems of the industry have been recognised in the income tax laws which, generally speaking, allow for the deduction of all capital expenditure before tax is payable. Notable exceptions to this rule are the absence of special deductions for mineral processing facilities and the absence of any deductions for a large part of the expenditure on ports and port towns. The scope and extent of infrastructure expenditure is discussed. The consequences of the burden imposed on the industry include tax inequity, higher capital and operating costs, "high grading" and