Newly Elected Parti Quebecois Wants To Raise Mining Fees, Scaring Businesses

 @http://www.twitter.com/uberdrivel on September 05 2012 3:12 PM

After seizing minority control of Quebec's legislature and premiership on Tuesday, the separatist Parti Quebecois is seeking to increase mining royalties and individual taxes, which could impact companies like Cliffs Natural Resources (NYSE: CLF), Rio Tinto Group (NYSE: RIO) and Xstrata Plc (London: XTA).

Parti Quebecois, which won 54 of 125 seats, proposes royalties of 5 percent of the gross value of mining output, along with a 30 percent surtax on profits over 8 percent of investment, according to Reuters. Mining duties are currently 16 percent of profits, and the party says the new rules would create $388 million over five years in revenue, to be used to pay down debt.

Pauline Marois, Quebec's first female premier and leader of Parti Quebecois, called for a plan last week that would increase net new spending by 992 million Canadian dollars ($1 billion) over five years, reported Reuters. The party also wants to decrease income tax exemptions for capital gains to 25 percent from 50 percent, and add two new high-income tax brackets. It also plans to block increases to electricity fees and tuition.

Mining companies declined to comment to Reuters, but industry figures said companies were concerned by the new leaders.

"They will not move, but they will certainly reduce the pace of their investment if the government that is elected is not able very rapidly to reassure the business community, because right now they are worried," said Yves-Thomas Dorval, president of the Conseil du Patronat, the province's biggest business lobby, told Reuters.

Quebec's economy grew by 1.7 percent in 2011, less than the national 2.4 percent GDP growth of Canada, the world's 10th largest economy.

Parti Quebecois' long campaign to hold a referendum on a potential Quebec secession from Canada has become a secondary issue compared to the economic challenges.

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