Higher royalty rates proposed
NNSL August 1996
NNSL (Aug 27/96) - Ottawa has proposed higher royalty rates as part of its proposed mining royalty structure changes.

The suggested revisions come as a result of potential diamond mining in the NWT, changes to the Income Tax Act and “the frequent disagreements with industry over the interpretation of certain provisions of the royalty legislation.”

In a media release, Ron Irwin, Minister of Indian Affairs and Northern Development, said the changes would ensure the NWT continues with some of the lowest mining royalties in Canada.

“While these proposals would increase royalties, they would remain below the average of major Canadian mining provinces,” Irwin said.

Industry officials contacted said they wanted to further examine the proposals before giving comment.

The royalty structure is geared to generate returns for Ottawa and private developers. Royalty rates are part of the information companies use to determine if a project will be profitable.

A review of the royalty structure began in February 1995 “to increase revenues and ensure a fair return to the Crown.”

The review included federal and territorial government departments.

These agencies determined that the desire to increase revenues could be reached by modifying the present structure.

Other changes include eliminating the three-year royalty-free period, requiring royalty payments on a quarterly basis rather than once a year, and allowing 100 per cent rates of depreciation of buildings, plants, equipment and machinery.

Ottawa is looking for public comments on the proposals by Oct. 31.