Letter to the Editor Merrithew offers flow-through figures

I have read with interest your article in the Dec 15 issue of The Northern Miner (“Merrithew urges support of flow- through program”) and I am pleased to see that you have taken my message to the wider audience of all those concerned with the Canadian mining industry. However, there is a statement in the article to which I would like to add some important clarification. You have quoted me as saying that federal and provincial governments lose between $4-500 million and $700 million as a result of flow-through.

My officials estimate that total flow-through funding for 1986 is $475 million when the final figures are tabulated. For the years 1983 to 1985 flow-through share financing totalled $908 million.

1986 … $475 million

1985 … $260 million

1984 … $139 million

1983 … $ 34 million.

With these levels of flow-through funding, $700 million really refers to the total individual investor tax savings since the program became popular, following the changes of the April 19, 1983, budget. I might add, that over the same four years, the amount of off-property exploration (that is, the “grass roots” type of exploration we are interested in maintaining) is estimated at nearly $2 billion.

Of course, as your reporter Thomas Loree has correctly noted, the individual investor tax savings should be weighed against other criteria, such as the present and future economic benefits of exploration financed by flow-through.

From another perspective, if the exploration tax deductions had been used by corporations, the corporate tax savings would have exceeded the individual investor tax savings. It is very clear that the “tax expenditure” question is something that can be viewed in different ways. Furthermore it is important to bear in mind that only if the exploration level were excessive, would there be a real cost in terms of misallocation of resources. So far, however, I have seen no evidence that exploration is at an unreasonable level.

I hope these remarks may be useful to Mr Loree for his future articles on flow-through. Gerald S. Merrithew Minister of State Forestry and Mines Ottawa Gerald Merrithew