There is a few speculation the federal government could hike the capital gains tax in the upcoming budget. Trent Mell thinks that may possess a devastating effect on the junior mining sector.
“You could decimate a business that’s already on its knees,” the president of PearTree Securities said within an interview.
His view is that a capital gains hike could crush the marketplace for flow-through shares, that has been a vital source of capital for the junior mining sector in excess of three decades. It is a unique type of stock issue that allows companies to pass through on (or literally “flow through”) greenfield exploration expenses to primarily high net worth investors, who can deduct them against taxable income.
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If the tax rises, these shares turn into much less appealing to those investors, Mell said.
“We just hope the federal government is truly informed about this issue,” he added.
PearTree is involved in a unique type of flow-through share issuance where the shares are donated to charity.
