GN gives fuel-tax break to mining companies

To entice more job-creating investment from outside the territory, the Government of Nunavut will provide fuel tax rebates to mining companies and other businesses starting April 1.
The move is one of only a few highlights contained in Nunavut’s business-friendly budget for the 2006-07 fiscal year.

“A lot of the departments are going to do a lot of work to grow the economy of Nunavut, to make life better for the people of Nunavut and to make it known to the outside world that Nunavut is open for business, as our premier has been saying for the last six, seven years now,” the finance minister, David Simailak, told reporters at a budget lock-up this past Wednesday.

The GN’s finance department estimates that the tax-break will cost the GN about $1 million a year in revenue.

But they say that in return, they’ll get back about $4 million a year in corporate, property, personal and payroll taxes from new economic activity in the mining sector.

The GN now predicts that new mines will create 1,500 new jobs over the next 10 years, representing about 12 per cent of the workforce.

“We’re seeing mining as the key to Nunavut’s economic growth,” Simailak told reporters.

The fuel tax rebate also responds to a longstanding complaint from the mining industry. For years, they’ve said that the Nunavut fuel tax, aimed at paying for public roads and other infrastructure used by fuel-consuming vehicles, is an unfair burden on the industry.

That’s because mining companies generally build their roads and mine-site infrastructure with their own money, not the government’s.

Victor Tootoo, an assistant deputy minister in the Nunavut finance department, told reporters that companies must enter a “development participation agreement” with the GN before they qualify for the rebate.

There’s no sign yet of any new revenues flowing from the much-ballyhooed aboriginal spending “announced” by Canada’s first ministers in Kelowna, B.C. last year.

That means no big social housing construction program until after territorial and provincial premiers hold more meetings with Stephen Harper’s new Conservative government to carry out the promises that former prime minister Paul Martin announced in Kelowna.

Instead, Nunavut will build one social housing duplex in each of 10 communities this year, spending about $5 million to build 20 new units.

The GN estimates that it will take in about $1.01 billion in revenue this year, and spend $976.8 million, with $51.6 million set aside for contingencies.