Yellowknife (Apr 28/03) - The impact of federal tax changes on mining exploration spending remains murky, says the Mining Association of Canada.

Both MAC and the NWT and Nunavut Chamber of Mines were hoping a new exploration investment tax credit announced in the federal budget in February would amount to about 15 per cent.

MAC spokesman Dan Paszkowski said the ministry of finance has since advised it will be just 10 per cent.

"That is lower than we were anticipating or hoping for," said Paszkowski.

The tax credit was introduced due to the elimination in the budget of the 25 per cent Resource Allowance, which included proviosions to encourage exploration.

The industry also got a reduced tax rate -- from 28 per cent to 21 per cent, phased in over five years.

Paszkowski said Ottawa believes the reduced corporate tax rate and investment tax credit will make up for the loss of the Resource Allowance.

The industry doesn't see it that way.

"What our members are telling us is that the industry will be paying more tax than we would have with a higher corporate rate."

The impact on exploration spending is uncertain, he said.

"We are still working with the provinces and Ottawa on the definition of the exploration expense and what is applicable."