As your next premier, I have proposed a consultation with the members of the Yukon Chamber of Mines to bring forward a modernized royalty rate on gold, as well as a reasonable royalty on hardrock mining.
I will ensure that royalties for our natural resources are on par with the rest of the country, and then use those revenues to create a Yukon Resource Legacy Fund.
According to the Yukon government’s own figures, the total value of minerals gleaned from Yukon soil was $284 million in 2010 (excluding placer gold). Of that, Yukoners saw a total royalty payment of $0 - unless you happened to be a member of the Selkirk First Nation, which had the foresight to negotiate a better royalty rate than the rest of the Yukon. It received a royalty payment of $5.9 million for a total mineral production of $50 million in 2009 - and I congratulate the First Nation leaders and citizens who negotiated that deal.
The combined Yukon and federal corporate tax in the Yukon is on the high end among Canadian provinces and territories, though far from being the highest. But mining companies operating in the Yukon don’t actually pay that rate at tax time.
The Yukon offers massive deductions on exploration and on development, and companies pay zero capital taxes. In fact, 100 per cent of these expenses are deductible, along with additional deduction expenses on milling and processing allowance caps, as well as a 15 per cent asset depreciation deduction.
In other words, mining companies are reimbursed to find the mine, to develop the mine, pay no property tax, get a break on maintenance costs, and if they make money in other areas along the way, it is tax free.
Finally, a producing mine will only pay top dollar if it declares a profit of over $55 million. A mine declaring income under $1 million pays three per cent. A mine declaring over $20 million pays eight per cent. Only when a mine declares a profit of $55,000,001 does it hit the 12 per cent taxation rate – and they only pay if it has recouped the entire cost of their declared investment.
These figures are all for hardrock mines. Placer gold royalties, at $0.375 an ounce, are separate and distinct; though the issue is fundamentally the same.
If the Yukon and Liberal parties refuse to get fair value for the resources that we as Yukoners own now - when prices are high - then how can we can expect any action on royalties in the future?
A Yukon New Democrat government will continue to support the industry through breaks in exploration and development - we always have and always will support a responsible, sustainable mining industry. After all, it was NDP governments that brought in the Yukon Mining Incentives Program, the Prospector’s Assistance Program and the Mining Exploration Tax Credit.
However, unlike the Yukon and Liberal parties, we are also proposing a reasonable, responsible consultation with industry about mining royalties. Like I said when announcing the Yukon Resource Legacy Fund, “Reasonable people will find reasonable solutions.” The other parties seem very keen to promise millions of dollars in new spending, but only the Yukon New Democrats have a sustainable plan to pay for new spending with a reasonable royalty increase.
If we’re going to debate the realities of mining royalties, taxes and profits, then we as Yukoners deserve the facts. I’ve always been forthright that we will deliver a fair deal after extensive consultation.
So when we talk about royalties and tax structures, let’s consider all of the facts - and leave the name-calling and fear-campaigning out of the debate.
Liz Hanson, leader
Yukon New Democrats