Arctic Yearbook 2014 - Page 205

  205   existing resource royalty regime. For example, an economic analysis done by experts for the Gwich’in Tribal Council found that the current Resource Revenue Sharing agreement does not reflect principles of equalization fairness. However, the report concluded that Devolution under these terms would be beneficial, though not optimal (Irlbacher-Fox 2012; GNWT 2011). In spite of ongoing discussions in the NWT about the devolution deal’s shortcomings, including the 5% cap and clawback provisions in the Resource Revenue Sharing agreement, NWT Legislators voted 17-1 in favor of Devolution on June 5, 2013.7 It is possible that a future review of the Resource Revenue Sharing agreement could result in renegotiating the agreement to reduce the clawback. The Resource Revenue Sharing agreement is a deal struck under a royalty regime that sells resources located in the NWT relatively cheaply by global standards, informing the question that continues to be debated by citizens, elected leaders and analysts: Is the NWT getting a fair deal for its resources?8 For example, in 2011, less than $100 million was collected in royalties on NWT exports worth over $2 billion, though exact figures are unavailable in Canada (Government of Canada - Natural Resources Canada 2011; Irlbacher-Fox 2012).  15%  IRR   30%  IRR   Figure 1: Government take from mining across the globe, comparing average effective tax rates across jurisdictions for projects with 15% and 30% real internal rate of return (IRR) before tax.9 As outlined in Figure 1, the combined federal-territorial ‘government take’ in the NWT is low by global standards. Since 2003, Canadian jurisdictions have implemented tax rate reductions of a larger magnitude than any other major mineral-producing jurisdictions, while retaining general corporate tax deductions and tax credits for the mining sector (Government of Canada - Natural Resources Canada 2011). In fact, Duanje Chen and Jack Mintz of the University of Calgary’s School of Public Policy argue that Canada’s mining-tax system should be modernized, and provinces should eliminate these preferential and wasteful tax breaks for the mining industry. In their analysis, provincial treasuries cannot afford these tax breaks, and neither can the Canadian economy as a whole (2013).10 Daitch, Schwann, Bauer, Dias & Fan Li