Provincial Budget reveals a multi-faceted plan to improve Ontario’s finances

This article was provided by the Ontario Mining Association (OMA), an organization that was established in 1920 to represent the mining industry of the province.

Everyone will be called upon in different and sometimes unequal ways to make a contribution to improve the province’s finances in the future, according to the Budget delivered by Ontario Finance Minister Dwight Duncan yesterday.  “Strong Action for Ontario” outlined a combination of spending cuts, administrative streamlining and new revenues to reduce the province’s projected 2011-2012 deficit of $15.3 billion and produce a balanced budget by 2017-2018.

“Right now, the single most important step the Ontario government can take to grow the economy is to balance the budget,” said Mr. Duncan.  “We must change the political culture and the way all of us in this legislature and across the province approach and confront the challenges we all face.  To ensure strong job growth into the future, Ontario must eliminate the deficit to strengthen the foundation of the economy.”

Mining is mentioned several times in the Budget.  Mining companies pay all of the same taxes as corporations in other sectors of the economy.  In addition, mining companies are the only enterprises, which pay the Ontario Mining Tax.  The Budget has fully endorsed the recommendation of the Drummond Report to review this industry specific tax.

The Mining Tax Act levies a tax on profits from the extraction of minerals in Ontario.  This tax collected about $140 million in 2010-2011.  “The government is proposing to work with stakeholders in reviewing the current system to ensure Ontario receives fair compensation for its non-renewable resources,” said the “Strong Action for Ontario” Budget Papers.

“Mining companies will welcome a review of the mechanics of the Ontario Mining Tax. The industry has a good story to tell,” said Ontario Mining Association President Chris Hodgson.  “The mineral sector in Ontario is growing.  It is attracting billions of dollars in investment, generating thousands of new jobs, building communities and creating employment and entrepreneurial opportunities for First Nations residents in Ontario.”

“Ontario’s mining industry is holding its own against international and domestic competition.  The Ontario Mining Tax on profits is one component of the entire cost structure including corporate taxes, payroll taxes, labour, electricity and other input expenses,” he added.  “These combined costs need to be below internationally set commodity prices for metals such as gold, nickel and copper, if the mining industry is going to continue to provide employment and tax revenues.”

Other deficit reducing actions in the Budget include the freezing of previously announced cuts in the Corporate Income Tax rate and the Business Education Tax rate.  There are also pay freezes for MPPs and executives of hospitals, universities, colleges, school boards and provincial government agencies.  The Budget also seeks to control the pay of people in the Ontario Public Service and better manage public sector pensions, health care delivery and drug costs.

While the Budget does claim it contains no tax increases, there are a number of user fee increases.  Hikes in motor vehicle license fees have been announced earlier.  Water taking charges are being increased and fees are being raised for Environmental Compliance Approvals and the related Environmental Activity and Sector Registry.  Water taking fee alterations are expected to raise an additional $3.5 million and eco fee changes are estimated to provide the government with an additional $3.8 million annually.  Changes in hazardous waste fees will raise a further $2.5 million annually.

The government plans to establish a multi-stakeholder Jobs and Prosperity Council, which will provide advice to boost productivity and employment creation.  The mining industry will be sharing its positive story on investment, job creation, First Nations capacity building and providing tax revenues with this council.  

The Budget Papers also include a section dedicated to the future of mining Ontario and the Ring of Fire.  “Resource-based industries are a vital part of a strong Northern economy.  The discovery of significant mineral deposits in the Ring of Fire, an area in Ontario’s Far North, presents major opportunities.  Proposed mine developments currently under consideration in the Ring of Fire are expected to create more than 1,500 permanent jobs once the mines are in full production.”

Mining has a long history as a responsible partner contributing to the society and economy of Ontario, no matter what the state of the province’s public finances. 

March 28, 2012
 
The Ontario Liberal Party election platform from last Fall said:
“At least six mines are reopening and four new mines are expected to open by the end of 2012 and we’ll open at least eight new mines in the next 10 years.”
 
Also, there was a promise to extend the Northern Industrial Electricity Program.

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