Mining Watch Canada says Ontario should tax mining companies at a higher rate.

The environmental watchdog group wants the provincial government to follow a recommendation in the Drummond report and eliminate a tax break for mining companies, which reduces taxes to about 8 per cent of mining companies' profits.

Ramsey Hart, who speaks for Mining Watch, said that's the lowest mining tax rate in Canada.

“Those mineral resources do belong to the people of Ontario, so we're losing an opportunity to generate income that could help us address our deficit issues and support social programs,” Hart said.

The Drummond report also recommends a review of the mining tax system — something that Hart said is needed before the Ring of Fire, located in the James Bay lowlands, goes into production.

Recouping Ontario’s mining wealth

Hart noted that Saskatchewan's booming mining industry retains nine per cent of the value of mineral production in that province. In Ontario that rate is less than 1.5 per cent.

“From Mining Watch’s analysis, it's pretty clear that we're … at the bottom in Canada, in terms of recouping wealth from mining in this province, as far as royalties or mining taxes go.”

But the president of the Ontario Mining Association (OMA) disagrees. Chris Hodgson said eliminating tax breaks for mining companies in Ontario will scare away investors. He said mining companies already pay their share by building roads and hydro lines in the province.

Helping dig province out of debt

“So, is the Ontario government talking about levelling the playing field — like Quebec and Manitoba where they build all the infrastructure above the 49th parallel — or are they talking about 'you pay all the same tax and you add the infrastructure',” Hodgson asked.

In a pre-budget letter sent to Ontario Finance Minister Dwight Duncan, Hodgson wrote that “mining holds the potential to quite literally help dig Ontario out of debt. As the province faces a deficit of $16 billion this year, mining can be a partner in economic growth – growing jobs and growing government revenues.”

Hodgson noted that the OMA supports greater investment in basic education and skills development among First Nations in Ontario. Ontario mining companies pay all the taxes and fees paid by other sectors but, on top of that, they also pay the Ontario Mining Tax, a profit based royalty, he said.