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Th Acton Frae July DOES ANYBODYOUT THERE GIVE A DAMN IF THE MINING INDUSTRY IS TAXED TO DEATH Ncarl all of us arc paying more taxes these day Nobody likes to pay more taxes Neither do It it tougher to meet payrolls answer to shareholders replace equipment expand our operations and remain competitive in world markets But were not opposed to paying more taxes or operating under new regulations providing the tax rates and the new rules are reasonable and dont put us out of business The Risks and Realities of Mining rates royalties are especially important to us because mining are basically quite different from other types of industry For example mining companies must produce minerals iheic air found and more and more this is m remote regions the country where costs of establishing a mine are much higher Ore bodies of course are eventually mined out and the difficulties and uncertainties ot tinding new deposits involve heavy financial risks Even after a mine is found unforeseen problems ot extraction and processing can frequently arise Furthermore mineral prices are determined in international markets and vary ovei a wide range making forecasting extremely difficult especially since a new mine can be years getting into production Supertax and the Supersqueeze Right now were caught in a tax squeeze between the federal government and certain provinces all of whom want to increase their direct tax and royalty revenues from the mining industry Unfortunately both levels of government are trying to maximize their respective taxing powers ot the industry without consulting each other or coordinating their policies The result has been ot hastily ised tax and my ally measures hich threaten the jobs of thousands ot employees and to alffCanadians from widespread economic activity which mining generates in all pans ol Canada During the past several months the governments of British Columbia Manitoba Ontario and Saskatchewan have either introduced or given notice ot new legislation which coupled with new fcderaltaxesasproposedintheMav budget would mean the total tax burden would range up to per cent or even higher for many mining companies In certain profits would raxed at ruiuulous rates htng 100 per em Not only are the combined tax and royalty rates oppressively high hut stringent new controls in certain provinces both implemented or proposed would result in of the In Manitoba for example the government intends to reintroduce a bill which will effectively control production levels as well as substantially increase tax revenues In British Columbia lie govern men I has imposed a base royally plus a super royalty based in effect on sales values or prices rather than on prolils taking no account the inevitable increase in operating costs Ontano has introduced new steeply graduated lax rales Saskatchewan is considering heavy new taxes and piovinccs are also reviewing existing lax legislation In absence consultation and coordination provincial las squeeze not only threatens to cripple the the mining but will do lasting harm to the Canadian ononis And dials where you get caught too The Supersqueeze Will Hurt Everybody You depend upon the mining industry in a host dilterent way s Just think about Nearly everything we use in daily life is made metals and minerals Without them wc would be reduced to the most slate imaginable Consider l hese laets Canada is the lngest producing nation in the world Mi its mining industry ides direct employ mem tor more than I Directly anil indiredlv mining employment tor an estimated II percent the total employed labour torec in Next to construction it pays the highest wages and salaries ol all Canadian industries Mining and mincial based products account tor 2d per cent Canada commodity exports I hey are one ol to pay in the world The industry spends about two billion dollars annually tor equipment supplies and services and accounts per cent til alt the tonnage carried by rail and watei Perhaps us most important is the development new communities throughout the less favoured regions ol Canada Lets Get Profits Into Perspective Si til some people believe the mining industry should be taxed and controlled more than it is now when headlines m press proclaim seemingly large gains in profits by mining companies people tend to think the industry can easily much higher taxes But too profits arc reported terms y earto year or percentage gains This can be misleading and can give the impression of excessive profits Business generally operates in and this is especially true ot the mining indusirv Most investors would agree a more realistic way to look at profits is on the basis of it turn inn Med omit the of risk ptritni of Heres Hon the industry ompaied it till tin mi and the pattjn i enn RATE OF RETURN ON CAPITAL EMPLOYED Total Manufacturing Total All Industries Total Mining 1969 1970 64 1971 1972 19691973 64 7 100 71 61 68 68 36 102 76 deludes roil oil Slili lies C Indusliidl Corpo Financial Statistics Clearly considering the special risks involved the mining industrys return on capital invested in the past live years is not higher than manufacturing mi industry generally and is less than many major industries including and chemical electrical rubber pruning and publishing and others Of the mining industry is a making enterprise Surely thats good isnt it Profits provide the motivation lor every business decision from product innovation to the high risk taking mincial exploration also provide governments with a large measure their income Iheies nothing iinnioiil about profits Without profits business and industry could not exist let alone develop or expand their operations slime lit talk sense about profits and get them into perspective Its Time To End The Squabble And its time lor governments federal and provincial to end their squabble over tax revenues from the mining industry and reverse ihe trend towards increasing interference and management of this vital industry Already exploration and development activities are being drastically curtailed in certain provinces and mining companies are being forced to accelerate their exploration efforts outside Canida since they must maintain supplies lor their customers Thais a basic tact of business life will mean only the very highgrade mines will be developed in Canada and industry will inevitably decline Jobs will be lost and mining communities as well as the secondary and manufacturing industries which depend upon milling will suffer severely rbehard fact is Canada has already become a much less attractive place for the large amounts risk capital required for mining Mining you see is your business too lei snot destroy it It industry which for the future well being of every Canadian should be permitted to live and to giow under reasonable tax rates and reasonable regulations For more information about the tax squeeze on the mining industry write SUPERTAX co The Mining Association of Canada Suite 2170 Tower A Place Ottawa Canada COUNTS on Mining THE MINING ASSOCIATION OF CANADA