The Yukon and federal governments have announced there will be a change in the agreement for sharing resource revenues.
Currently, any amount of resource royalties the Yukon earns in excess of $6 million is deducted out of our transfer payments from the federal government.
Under the new agreement, the Yukon could receive more than $40 million in royalties before any money gets deducted from our federal transfer payments.
Well, $40 million is a lot more than $6 million, so let’s all go roll in the dough.
But there is one small problem.
The Yukon hasn’t even been collecting the $6 million, never mind anything above that.
Looking forward, it appears extremely unlikely that the Yukon will ever generate $40 million in royalties thanks to incredibly low royalty rates on mineral resources.
For the budget year 2011/2012 the Yukon expects to get $115,000 in oil and gas royalties and related revenue.
Mineral resources are expected to generate about $1,235,000 in permits, fees, leases and royalties. Of that, less than $20,000 is actually mining royalties, because of the outrageously low royalty charged on placer gold (37.5 cents an ounce, irrespective of the current price of gold).
There are no hard rock royalties paid to the Yukon government, and thanks to a hard rock royalty system that allows companies to write off almost all their expenses it is very doubtful whether the Yukon will see substantial hard rock royalties in the near future.
Chuck in other sources of revenue generation, such as land sales, forest fees and agricultural leases and it looks like the total raised through resource revenue will come in at $1,803,000.
Not even close to $6 million.
And 20 times less than the new cap of $40 million.
If the Yukon does not change its mineral royalties we will not benefit from the new transfer agreement at all. If the Yukon is serious about taking advantage of the new transfer agreement it has to get serious about royalties.
It’s time to apply a respectable royalty on the minerals that belong to all Yukoners. At the moment we are literally giving them away to the mining companies.
Lewis Rifkind, mining co-ordinator
Yukon Conservation Society