In its 2016 budget, the Government of Canada announced it would be undertaking a review of tax measures. The METC, for example, has been in place since October 2000 and has been renewed annually, with support from all political parties. The Liberal Party of Canada pledged to retain METC as part of its election campaign. According to the federal government, in 2013, the last year for which figures are available, METC tax incentives have benefited 68,000 individuals and provided investment dollars for 500 corporations to carry out exploration activities across Canada (see here for details). The cost of the tax credit is estimated at $125 million for 2016, and peaked at $430 million in 2011. The cost is offset by the benefit of industry’s annual investment in exploration and deposit appraisal work across Canada – often in remote areas such as British Columbia’s Golden Triangle and central interior – and ultimately the major socio-economic benefits (job creation, municipal, provincial and federal taxes, and economic growth through use of support services and local vendors) provided through the development of new Canadian mines, for which robust and ongoing investment in mineral exploration is a critical prerequisite.
The Prospectors & Developers Association of Canada (PDAC) estimates that flow-through funding accounted for 72 per cent of all exploration financing in Canada during the 2012-2014 period. And Finance Canada has estimated that every dollar of flow-through financing generates $2.60 of exploration-related expenditures in Canada. Removing FTS as a viable funding mechanism could drive those exploration investment dollars into jurisdictions other than Canada, and seriously cripple Canada’s, and British Columbia’s, mineral exploration and mining industries in the future.