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Mexico’s senate approved by 73 votes to 50 the broad outline of a package of tax reforms, which included a debated 7.5% charge on resource companies, and as much as 8% for gold, silver and platinum.
The lawmakers, however, decided to set aside scores of divisive sections to be processed later.
Members of the National Action Party (PAN), the main opposition party, expressed their discontent with the decision by abandoning the session as the Senate began to work through the reservations, reports CNN Mexico.
They claim the taxes will see investment in the country’s mining sector drop off dramatically, with major companies such as Canada’s Goldcorp (TSX: G), (NYSE: GG) and Grupo Mexico warning they may need to take their money somewhere else.
Despite the senate tensions, the tax package was expected to be finalized later Wednesday or at some point today. Following senate approval the reforms only need to be enacted by President Enrique Peña Nieto to become a law.
“Mexico is completely pricing itself out of the market,” says Rosalind Wilson, head of the Canadian Chamber of Commerce’s mining task-force in Mexico. In an interview with The Economist, she noted that last year the country took 53% of the $1.9 billion raised on the TSX and its junior twin to finance mining in Latin America. In the first eight months of this year, the figure had fallen to 17%.
About 334,000 people work in Mexico’s mining sector, and more than 2 million are indirectly employed by it, which makes it the country’s fourth largest industry in dollar income, only behind cars, oil and electronics.
7 Comments
norman cartmell
Mines are closing as it is it will only make things worse and the goverment will finish up with less money more unemployment.
Chris Hicks
Hitting the mines when they can least afford it – everybody loses, particulaly the fellows in Mexico who rely on foreign miners for thier livelyhood. Expect the majors to dump their future projects to local companies that will pay the local workers a fraction of what they were earning. Government never takes these decisions beyond the first derivative, never even wonders what the consequenses might be. Like bandits, they grab the money and run, hoping someone else will fix the mess they leave behind.
Miner business developer
It looks like that the goverment wants to go back where the land lords ruled, to have more people to work not for themselves thus to work for the goverment, where we will have more poor people,unemployment and totally dependence on what polítics have to say
hellbentgerbils
look whos in charge
Mike Failla
Tax increases stifle any countries economy and mexico is no exception. Look what obamacare is doing here in the U.S. to our economy,or lack there of. It is the law of unintended consequences.
tim watt
What governments overlook in establish royality or royalty type taxes is that they severely affect the cut of grade leaving much of which would have been ore in the ground. Governments are not like prospectors whose only source of revenue can come from retained royalties when dealing with majors. Governments can tax the income from sales, tax the income from workers, tax sales of equipment and income from suppliers. By introducing royalty taxes, governments hurt not only the mining company, but workers, suppliers, and everyone else who might have profited by the money spend by them. Royalty taxes are clearly bad for business for everyone including the government. .
Resource worker
Good. I hope they bring the investment money back into Canada. Take note majors: BC is open for mining.