You should ask them if they had Dave Barrett as a fiscal/resource advisor.
Social Credit blamed a sputtering economy and high unemployment on Barrett's socialist policies. Bennett said the NDP's Mineral Royalties Act devastated the British Columbia mining industry while a hike in timber royalties was killing forestry jobs. Social Credit also capitalized on public unhappiness with the Insurance Corporation of British Columbia — the new government auto insurer that lost $32 million in 1974.
Mr. Speaker, it does give me a great deal of pleasure to say that Bill 57 repeals the Mineral Royalties Act, as of January 1,1977, because it was this legislation which first aroused me and got me interested in politics. Whether or not that's a good thing I don't know, but I happen to be here right now and, as I say, I take a great deal of pleasure in repealing the Mineral Royalties Act.
Mr. Speaker, this legislation will impose a 17.5 per cent tax on net income from the operation of a mine.
Mr. Speaker, the level of taxation imposed on the mining industry through federal and provincial taxation, when this bill becomes an Act, will have a maximum level of 56.875 per cent. This level provides for depletion allowances and write-off of capital expenditures as it should. The level of taxation for the mining industry in British Columbia will be dependent, of course, upon the price of metals. If I take a 20-year average mine life, the typical mining situation - which we did in our study of the taxation - and the price of 85-cent copper, which is what we're going to need in order to develop the low-grade ore bodies we have in this province, and considering the normal writeoffs, the normal exploration expenditures for mining companies over the average 20-year life, the level of taxation will be 48.6 per cent. As the mine matures and goes beyond the 20-year period, this rate will approach the maximum of 56.875, but by this time mining companies will realize that their ore body is nearing an end and probably they will reduce that level by committing dollars to exploration to further develop the resource of the people of British Columbia so we can all benefit from it.
One of the members on the Halliwell commission made a remark, in comment immediately after this bill was introduced, saying that the big mining companies will just be able to sell their products of their mines to their own smelters somewhere and thereby avoid taxation. Well, Mr. Speaker, section 4, 1 believe it is, of this Act makes that impossible, because the commissioner who is set up under this Act will have the right to deem a true value if minerals are sold to another company which is less than an arm's length from the producer.
Our taxation study group, when looking at the maximum ultimate return to the people from the development of their resources, did a computer study of 70 different mines in production across Canada. These were real mines and real mining situations, and they used profit-based taxes and different levels of royalties, different levels of both types of taxes, and it was, demonstrated that in the long run the maximum return to the governments of this country are realized through a profit-based tax because a profit-based tax does not shrink the size of an ore body, and it doesn't increase the cut-off grade. It allows for the maximum production and utilization of the people's resource.
We need the mining industry in British Columbia; we need the investment in mining in this province. This bill, in combination with the one on which we just passed second reading, will help ensure that we do have a continuing, viable mining industry in British Columbia. Mr. Speaker, I move second reading of this bill.
(another opinion)
I think that this isn't a very responsible way to go, Mr. Minister. I feel that any kind of a person who goes into business should be required to pay a fee at the beginning, not at the end. Because in many cases what if they failed? And they're going to fail, at least by the time they get around to showing a net profit, with all of the dodges and ways of writing off capital costs and operating expenses and trips to Hawaii, or wherever they want to go, buying up sites for exploration, holding onto them and accruing land accumulation and so forth and so on. There'll never be any profits.
Are you going to put a limit on the extent that they can explore? Are you going to have a system set up so that you can keep a surveillance on all activity? Are you going to put a limit on what is acceptable and what is not acceptable for expenses? You know, I just think it's carte blanche, and I think that we will find that there just won't be any profits.
Well, you know, this is a bill that is quite serious because all of the people of British Columbia are going to be affected. I don't think that we should be in any real hurry to allow it to slip through, although I think that the government has been very clever in introducing this bill at this time for second reading in between certain other pieces of legislation that are probably going to get the headlines. You'd like to slip it in and slip it out and get on, but, you know, this is the kind of bill that really should be talked about when the press gallery is filled up and we can find out what you're going to give away. |
