A study carried out by CEP revealed the details and effects that the mining royalty bill being discussed in the Senate will have on the industry and which will be put to a vote between the first and second week of November.
It is not only alarming, but also worrying the results released by the Centro de Estudios Públicos (CEP), regarding the increase in the tax burden that would affect mining companies operating in the country, which would represent between 47% and 74%", indicated the President of the Chilean Chamber of Mines, Miguel Zauschkevich Domeyko.
A study carried out by CEP revealed the details and effects that the mining royalty bill being discussed in the Senate will have on the industry and which will be put to a vote between the first and second week of November.
As reported in the newspaper El Mercurio, the authors of the study, the former president of the Central Bank, Rodrigo Vergara, and CEP researcher Gabriel Ugarte, pointed out that -if the royalty bill is approved- all those companies with production of more than 200,000 tons of fine copper per year would have a variation in the effective tax burden between 47% and 74%, depending on the price of the mineral.
In addition, CEP's analysis simulated with real data what could happen in a company that produces less than 100,000 tons of fine copper per year, whose current effective tax burden varies between 36% and 39%, given the lower margins that such companies could obtain.
As they explain, this would not be reflected in the project, which would take the indicator to be positioned between 56% and 70%, depending on the price of copper.
"These figures are alarming, mainly because of the competitiveness of the sector and clearly because of the production, especially of copper, which will need to increase in the coming decades. In view of the economic situation in the country and in the world, which influences production costs, the known figures would slow down the development of more mining, which is what our country needs", said Zauschkevich.
He added that it is essential that those who will make the decisions analyze the various aspects that have been presented in the different meetings.
"Both the mining companies and the Chilean Mining Chamber have made known the difficulties that the application of the royalty could cause, from the closure of some operations to the decline of our country in the world market. We consider that it is essential to eliminate the concept of ad Valorem", said Zauschkevich.
Finally, he called on the parliamentarians to look to the future, and evaluate the consequences of a country with a much diminished copper production. "If this happens, it will not be possible to carry out an important number of social programs, since the income of economic resources to the fiscal coffers will decrease substantially", he stated.
