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Hi-ho Silver (and gold, copper, molybdenum, lead…) away!!

18 April 2013

A long overdue reform that is beginning to make its way through the Chamber of Deputies is a raise in the mining tax, and charging a royalty on mineral exploitation.   A bill presented to the Chamber of Deputies would replace the practically symbolic per-hectare user fee with a five percent royalty on profits, as well as raising the income tax on profits somewhere above the present 30 percent.

While there is, as expected, the usual noise from some mining operators that higher taxes would mean they would invest less in Mexico, it’s not to be taken seriously, since they’ll have to operate where the mines are, and just can’t go looking for the lowest bidder.  And, given the recognition that Mexican taxes are well below regional averages for Latin America, operators have expected taxes to go up, and would prefer to have the matter settled sooner than later.

In the Senate, the leftist PRD and rightist PAN both oppose the PRI-backed proposal now in the lower house. The two opposition parties have slightly different demands on how the royalty revenues would be shared out between municipal, state, and federal governments and there are issues like mining safety, environmental protection, and workers’ rights that might be included — along with some raise in the tax or royalty rate — that will probably emerge sometime later this year.

(Reuters)

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