Ontario backing off of diamond tax, a bit...but only to 10%. In the Globe&Mail story on this today (hardcopy, can't post), they included that Mike Carpenter of Attawapiskat FN sounded off about this, too, saying it doesn't help anyone (except Ont gov, of course.)
Ontario changes controversial diamond-mining tax
Thu Jul 5, 2007 2:34 PM EDT
TORONTO (Reuters) - The Ontario government said on Thursday it will amend a new diamond mining tax that critics said would put a damper on exploration in the province.
The royalty, announced in the Ontario government's March budget, would have effectively taxed production as high as 13 percent depending on the value of a diamond mine's output. Under the previous regime, non-remote mines were subject to a 10 percent tax, while remote mines were taxed at 5 percent.
The amendments would allow deductions for certain expenses -- including new mine construction -- that should mean the rate will top out around 10.4 percent, the government said in a release.
"The additional deductions provided in the diamond royalty will encourage the long-term sustainability and global competitiveness of diamond production in Ontario," said Rick Bartolucci, minister of northern development and mines.
The original announcement had drawn criticism from the industry, particularly De Beers Canada Inc., which is building Ontario's first diamond mine, called Victor, expected to start production in the first half of 2008.
The mine should produce about 600,000 carats a year.
De Beers said the government's original proposal was "arbitrary and discriminatory" and was not discussed ahead of time with the diamond industry. Some northern mayors also criticized the royalty as being a deterrent to exploration.
The government said on Thursday it made the changes to the royalty after discussions with stakeholders.
The new royalty works on a sliding scale based on net profit, and will also allow for deductions on charitable donations and spending made under agreements with aboriginal communities.
A De Beers Canada spokesperson did not immediately return calls requesting comment.