wpid-Taxation.jpgGovernment of Ghana is set to enforce the re-introduced 10 percent Windfall Tax on mining profits, in spite of opposition from foreign mining firms, a senior official asserted here on Monday.

Larbi Siaw (Ph. D) Senior Tax Policy Advisor to the Minister for Finance told Xinhua after a presentation to the country?s parliamentary press that? the proposed ?tax, being a windfall tax would not affect the mining companies, except those which made abnormal profit: beyond a certain threshold.

He had explained earlier that the reason for the introduction of the tax was the continuous rise in the world market price for gold which people used as security in the turbulent world financial market, against the effect of mining on the country.

The government had attempted to introduce the same tax in the 2012 fiscal year, but the mining firms kicked against it, claiming it would choke the industry with taxes and force investments to exit the country?s mining arena.

The policy advisor explained that since the mining firms opposed the introduction of the tax in 2012, the government invited the International Monetary Fund (IMF) to advise on the issue and the recommendation was that the mining firms paid the windfall tax.

The IMF?s Ghana country assessment team led by Christina Daseking, which visited Ghana in 2011 and 2012, advised the government to raise more revenue from mining as was done elsewhere by mineral-rich countries.

Minerals are a wasting asset, and world prices of gold have risen to its current 1600 dollars and 1700 dollars an ounce from a low of between 400 U.S dollars and 500 dollars in 2005, but the taxes have remained the same, observed the tax policy advisor.

Some experts and industry analysts put the cost of producing an ounce of gold at 560 dollars as at June 2012.

?With this, most Civil Society Organizations (CSOs) argue that the mining companies are making super profit with gold selling on the world market at between 1600 dollars an ounce and 1,700 dollars an ounce,? Siaw continued.

The policy advisor described as unsubstantiated, the argument by some of the mining firms in Ghana that the new tax would affect all industry players whether they made windfall profit or not.

He insisted, ?This is an extra profit (Windfall) Tax which you will not pay until you reach your threshold.?

According to him, the government would ensure that all the deductions are done, while the threshold is based on the rate of return in the industry.

The government did not benefit from the Additional Profit Tax introduced for the same purpose in the mining industry in 1994.

Siaw explained to Xinhua that at the minister of mines who was empowered by law to fix the threshold for the additional profit pegged it at 35 percent, which was too high so ?no mining firm ?could reach that threshold and government ended up making no gain.?

?This time we are guided by history and literature available, yet we are going to take into account rate of return in the industry before we enforce the new regime,? he stated, adding that the Ministers for Finance and Lands and Natural Resources are requested by law to fix the rate.

According to him, while the mining firms claim government was being too harsh on them, civil society also thinks government is too lenient to the industry.

Ahmed Nantongma Director of Public Affairs at Ghana’s Chamber of Mines told Xinhua on telephone that the Chamber would meet to take a decision on the proposal as soon as the signal from government becomes clear.

However, Hannah Owusu-Koranteng, Associate Executive Director of Wacam, local advocacy CSO for responsible mining said the introduction of progressive taxation or additional profit tax had become the norm in most resource-rich countries.

?This is based on the (R)atio factor where the moment you have profit beyond a certain threshold you pay such taxes,? she said.

Owusu-Koranteng referred to water-pollution, environmental degradation among others as some of the havoc mining causes, but with very little benefit to the country and the mining communities.

?Ghana owns the resources, and so the practice in which mining firms make the maximum profit leaving the county with paltry financial benefits is not justified under the current circumstances, as Ghana does not even practice the Polluter-pay principle as pertains in other mining countries,? she stressed in a telephone interview with Xinhua.

Gold revenue for the West African country had increased ?28 per cent from 3,620,766,467 dollars ?in 2010 to 4,630,255,619 dollars in 2011 on the increased average realized price of gold which appreciated by 30 per cent from 1,219 dollars ?per ounce in 2010 to 1,583 dollars per ounce in 2011.


Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.