Yukon placer miners don't dig the idea of higher gold royalty rates

The Klondike Placer Miners' Association (KPMA) says modernizing the royalty rates for placer gold won't help the Yukon government avoid budget deficits.

About 35 placer miners presented their opinions to the territory's financial advisory panel at a meeting this weekin Dawson City.

The independent panel issued a draft report earlier this month, spelling out ways the government might balance its books in the future.One recommendation is to review taxation on mining with a possible increase on the royalty rate on placer gold operations.

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But placer miners say their industry makes a valuable contribution to local economies and should not be taxed further.

KPMA president Mike McDougall says although miners pay only about 37 and a half cents tax per ounce of gold a royalty rate that hasn't changed in a centurythey also pay business and personal income tax.

"We pay exactly as a family farm does we pay tax rates of the 21st century," McDougall said.

"Does a family farm pay a royalty on the wheat they produce? No. They pay tax to the Canadian government on the profits that they make from the sale of that wheat. We do the same thing we pay a tax based on our profits, to the government of Canada and the government of Yukon."

The current royalty on gold shipped from Yukon is 2.5 per cent of the value, but for the purpose of the tax the value of an ounce of gold is only $15. The actual value on Thursday was pegged at nearly$1,600.

'We don't make a lot of money'

McDougall says if Yukon placer miners were to pay royalties based on today's gold prices, and based on annual production of about 66,000ounces of gold, the government would see about $2 milliona year in additional revenue.

He says that's a drop in the bucket, considering that he's calculated the territorial government spends over $3.5 million dollars a day.

"It's not a revenue stream for the government. In fact, even if you were to boost the royalty rates to today's dollars, it's still not very much money.It's less than one day's worth of operating costs for the Yukon government."

McDougall says few placer miners are wealthy, andmargins are tight for the family-run operations.

"None of us are terribly profitable. We don't make a lot of money. The impression that a placer miner has a room full of gold that they can roll injust doesn't exist."

McDougall says he appreciates that the government must explore all the options when it comes to either reducing costs or generating revenue.

McDougallsays he came away from this week's meeting reassured that the financial advisory panel now has a good understanding of the realities facing placer miners.He says he also trusts the judgement of Premier and Klondike MLA Sandy Silver.

"I have confidence that at the end of the day, they'll make the right decision," McDougall said.

But he notes that the placer miners won't relent when it comes to defending their livelihood.

"We will be up on our back legs, there's no question. Finally, it's now time for this industry to get its point across and get its position out, so that people understand how we work, how the money that we generate is turned into the economy."