November 29, 2002
Opposition willing to give resources away, says Finance Minister
Finance Minister Joan Marie Aylward says it is clear to her that the Official Opposition is opposed to taxing the royalties a company receives as the result of development of non-renewable resources that are owned by the people of the province.
"I find it incredible that they are criticizing government for returning to the people of the province a portion of the financial benefits that royalty recipients receive as the result of development of mineral resources that belong to the people. It seems the opposition wants to give our resources away," she said.
Ms. Aylward said that based upon questions and comments made by Loyola Sullivan in the House of Assembly, she can only conclude that the opposition is opposed to returning to Newfoundlanders and Labradorians the kind of royalty they deserve for their share of the non-renewable resources.
"Is the opposition suggesting that they are not in favour of having a mineral rights tax? Are they against having a tax that would bring in revenue that would be used for such essential services as health care and education for our people? Are they saying it is OK for Archean Resources to earn extremely significant royalties from Voisey�s Bay - even after taxes - but it is not OK for Newfoundlanders and Labradorians to benefit from a resource they own?"
Ms. Aylward noted that while mineral rights holders such as Archean pay a mineral rights tax, mine operations such as Voisey�s Bay Nickel Company Limited pay a mining tax. All companies -not only Archean Resources - pay corporate income tax, she said. Almost 70 per cent of this tax goes to the federal government.
Ms. Aylward said it is government�s position that the people of the province should be compensated for the development of non-renewable resources they own. Government�s method of doing that is to share the tax burden between the mine operator and the mineral rights holder, so that the benefits people have a right to expect are shared among the parties that benefit financially from the resource development.
Referring to Mr. Sullivan�s assertion that government is deterring mineral exploration, Ms. Aylward said that is not the case. She said that proposed amendments to the Mining and Mineral Rights Tax Act provide incentives to encourage exploration. This will include implementing a tax-free threshold of $100,000 annually on royalty income, to help ensure that prospectors who discover minerals receive a reasonable return on the find if their rights are sold for royalties.
Another incentive is that exploration expenses will be included as an eligible deduction in calculating the mineral rights tax. These are in addition to other strong support government provides for the mineral exploration sector. This support includes several million dollars the Department of Mines and Energy spends annually on basic geology and services for prospectors, exploration and mining companies. The department also sponsors the $22 million Mineral Incentive Program, a five-year government and industry initiative which has encouraged new prospectors and mining companies to become involved in the Newfoundland and Labrador mining industry. This program includes the Junior Company Exploration Assistance Program, the Prospectors Assistance Program, and the Dimension Stone Incentive Program.
The minister said she would like the opposition to explain how, on one hand, they claim the province does not benefit enough from development of its resources, but on the other hand criticize government for collecting, on behalf of the people, revenues from resource development.
"It is interesting that Mr. Sullivan has failed to mention that Archean has gone to the courts twice concerning the mineral rights tax, and in both cases government�s position to support its people has been upheld," Minister Aylward said.
Media contact: Josephine Cheeseman, Communications (709) 729-0329.
2002 11 29 4:05 p.m.