Bill to reform the canon before Congress

28 October 2018

The 'canon' as our readers will know, is the basic channel for passing a proportion of tax and royalty revenues from central to local government in areas where natural resource extraction is taking place.

The canon includes rents from hydrocarbons (chiefly natural gas) as well as from mining. It is paid in different proportions to regional governments as well as to municipalities at the provincial and district levels. It forms a central strategy for persuading local populations that it makes sense to collaborate in mining and other such threatening projects.

A bill to change the law is currently being discussed in Congress. An APRA initiative, the reform would oblige local municipalities to pass over one-third of the 10% they currently receive under the law direct to the affected communities. The argument made is that this will reduce conflict as communities will see their interest more clearly being favoured by mining expansion.

However, the change has run into strong and justified criticism. Quite apart from the fact that it ignores all the fundamental issues that make the canon unsatisfactory (we listed these in an article in September), it will aggravate conflict within local communities since the money goes via nucleos ejecutores (executive units) to the communities 'directly affected'; those that argue they are 'indirectly affected' will feel even more aggrieved. It also, as the MEF says in a crisply worded critique, fragments and dissipates even further the revenue from mining and petroleum and pays no regard to the capacity to use the money. 

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