[miningmx.com] – SOUTH African finance minister, Pravin Gordhan, lifted the veil slightly on a new mining tax regime nearly seven months after the ANC fell silent on the matter following its Mangaung elective conference.
Prior to the conference, the ruling party announced its intention to study the terms of the so-called State Intervention in Mining (Sims) document which raised the prospect of a resource rent similar to one adopted, amid acrimony, in Australia.
Today’s advance was for Gordhan to announce the terms of reference for a complete tax review which would include the mining sector.
Unlike the ruling party, which mooted the imposition of a resource rent tax of 50% on all mining activities, Gordhan steered clear of any specifics, except to announce that an eight-member committee under the chairmanship of Judge Dennis Davis would consider whether the tax that mines currently pay is appropriate.
The committee will take recent developments in the mining industry into account, such as the agreement between government, labour and business, steered by deputy president Kgalema Motlanthe to ensure sustainability, growth and job creation and to safeguard investment in the industry.
Consideration would also be given to the woes the industry is facing, such as low commodity prices, rising costs, falling outputs and declining margins. The committee will also take cognisance of the industry’s current contribution to tax revenues.
Analysts and industry players have repeatedly warned that there is little manoeuvring for an already tax-burdened mining industry.
Andile Sangqu, executive director of Xstrata South Africa and a member of the Chamber of Mines’ executive council, earlier told Miningmx there is “no space’ for additional taxes and it would have major long term repercussions for the mining industry. “This is on top of the normal corporate tax and the royalty taxes.’
The committee, which includes financial and academic heavyweights, such as Vuyo Jack, co-founder and Chairman of Empowerdex, Matthew Lester, a professor at Rhodes Business School and a columnist on tax issues, Unisa law professor Annet Wanyana Oguttu and Tania Ajam, non-executive director of the South African Reserve Bank, will be required to submit interim reports to Gordhan.
A final report will be published on dates that still need to be determined after consultation between the committee and the minister of finance.
