Miners will head to Newfoundland or Ontario if Quebec increases royalty rates: KPMG

A study of Quebec's royalty rates for miners, which was hurried out before the provincial election, warned the government not to dip its hand any deeper into resource company pockets.

"The royalty rate used in the current regime in Quebec, 16%, is among the highest rates in the world for royalty regimes based on profits," wrote the report's authors, Fraser Milner Casgrain LLP and KPMG LLP.

There is no ideal regime rate, say the authors. Mining in each region is different and rates can be optimized for each area.

Quebec does have some favourable conditions for mining, namely political stability, good infrastructure and a regulatory framework, but the advantages had to weighed against the province's drawbacks, namely winter weather, distance from Asian markets and generally lower grade deposits.

The report authors warn that Quebec must compete for investment dollars or miners could decamp to neighbouring jurisdictions, like Newfoundland and Ontario.

The authors conceded that the regime is still "aligned" with similar tax regimes for resource companies in North America.

On Wednesday Quebec Premier Jean Charest met with Quebec Lt.-Gov. Pierre Duchesne to dissolve the national assembly and kick-off an election.

Opposition parties have accused the government of being too generous to miners.