The Quebec Government in Canada has unveiled a new mining tax system that is expected to generate hundreds of millions of dollars in extra revenue for the province.
The new tax regime, to become effective on 1 January 2014, will require all active mine operators in the province to pay a mining tax depending on the value of the ore at the mine shaft head.
The royalty rate for the first 80% of the ore extracted will be 1% and for the excess the rate will be set at 4% of the value of ore extracted.
Another major initiative involved in the plan includes a profit royalty tax between 16% and 23%, which will be charged when mining operations earn large profits.
According to the plan, mining companies should pay the greater of two amounts every year - the minimum mining tax or the mining tax on profits.
From now until 2020, the government estimates revenue to increase by nearly C$200m ($198.4m) per year, including C$50m ($49.6m) for fiscal 2015.
Minister of Finance and the Economy Nicolas Marceau said "We estimate that over 12 years, total additional revenues collected for the benefit of Quebecers will range between $770m and $1.8bn."
Revenue collected under the mining tax regime will be allocated to reduce the debt load, the minister said.
The upcoming Mining Act will also include various measures to generate more processing jobs, a ten-year tax holiday for large investments, as well as provisions for information disclosure.
Image: The new mining tax system is esitmated to increase the Quebec Government's revenue by nearly $198.4m by 2020. Photo: Stephen Codrington.