PERSPECTIVE: Rising metal prices, rising mining industry payments to government

Canadian miners are excellent at turning rising commodity prices into activity in every sector of the industry. For most companies, their activity puts their earnings well into the black. Riding on their coattails are the federal, provincial and territorial governments demanding a share of the profits.

According to the recent report released by the Mining Association of Canada, industry payments to Canadian governments increased by 65% in 2010. Such payments include corporate taxes, royalties and employee income taxes.

A 65% increase sounds at first like it might be too much. But rising commodity prices are pushing many, many producers into the black. If the recent price surge of gold is anything to go by, that percentage may be repeated in 2011.

Highlights from the 2010 report include:

• $8.4 billion paid to Canada's federal, provincial and territorial governments in 2010, a significant increase from $5.1 billion the preceding year
• another $1.8 billion paid by companies in the downstream fabricated metal products sector
• additional revenues from mining supplier companies across the country, ranging from engineering and equipment firms to railroad and marine owners and operators
• a measure of the royalties and similar payments accruing to each province and territory
• the relevance of regional revenue flows, particularly to Newfoundland and Labrador, Saskatchewan, Alberta, British Columbia, and the Northwest Territories.

Over the next five years, MAC estimates that well over $116 billion could be invested in existing and new projects, creating thousands of high paying jobs in every region of the country and further bolstering government revenues from the sector.

What was it someone said about death and taxes ... they are inevitable. And the mining industry should not begrudge paying its share of taxes. Canada is a wonderful country in which to live. Our land is blessed with abundant natural resources and our people with the resourcefulness to develop them. And the tax regimes here are predictable and not terribly onerous.