Fiscal Incentives for Critical Mineral Development in Canada: An Empirical Analysis
Date
2022-11-10
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Abstract
This capstone investigates empirically the effect of mining tax rate review on Nickel and Zinc production in Quebec, Ontario, and Manitoba. We employ the autoregressive distributed lag (ARDL) modelling technique to analyze the dynamic interactions between output of the two transition minerals and prices, mineral foreign direct investments, and relevant tax policy variables. Results show that long run relationship exist between Nickel production and the determinants for Quebec and Manitoba. However, no such relationship exists for Ontario. Zinc production is cointegrated with its determinants in Quebec, Ontario and Manitoba. The effect of mining tax policy is most discernible for Nickel in Manitoba, as a lower mining tax rate elicited improvement in Nickel production. Tax policy is not significant for Quebec and Ontario's Nickel production, but price and foreign direct investments are prime for Ontario and Manitoba, while only foreign direct investments matter for Quebec. Zinc output in Quebec is significantly impacted by price and foreign direct investments, while the gradual upward tweak to Quebec's mining tax rate coincides, curiously, with improvement in Zinc production. Possibly, the 2009/10 post-crisis growth momentum in Quebec's mineral space overshadowed sensitivity to a mining tax hike. To boost critical mineral supply in the era of energy transition, both federal and provincial governments need to roll out more critical mineral-friendly tax and non-tax incentives, oriented toward growing the supply chain responsibly and sustainably.
Description
Keywords
Citation
Oladunni, S. (2022). Fiscal Incentives for Critical Mineral Development in Canada: An Empirical Analysis (Unpublished master's project). University of Calgary, Calgary, AB.