A proposal to impose a windfall tax on mining companies by a task team of the National Treasury is a totally unexpected development and it will be opposed, the Chamber of Mines said on Wednesday.
Mzolisi Diliza, chief executive of the Chamber of Mines, said the industry was already confronted with an additional tax burden in the form of royalties which the government was planning to implement.
”The mining sector rejects the suggested windfall tax as an unacceptable encumbrance on an industry that is already being prejudiced by administrative burdens and logistical constraints,” Diliza said in a statement.
According to Diliza, the industry acknowledged that recent months had seen some improvements in long-standing deficiencies but it was common cause that mining in South Africa had not benefited sufficiently from the well-established global commodities boom.
”Investment in mining has also been far from satisfactory.”
Diliza said there was minimal justification for the imposition of further punitive financial measures to inhibit the capacity of one of the country’s few industrial sectors with the ability to create jobs.
He said the mining industry also understood that the mandate given to the task team was to investigate possible reforms to the fiscal regime applicable to windfall profits in the liquid-fuels industry.
”The mandate does not embrace mineral commodities,” he said.
Diliza said no consultation took place between the task team and the mining sector.
”The recommendations that have been made with regard to the business of mining appear to fall outside the terms of reference given to the liquid-fuels task team.”
In a statement issued on Tuesday, the Treasury said the report of the task team did make some recommendations on the Minerals and Petroleum Royalty Bill though it was not part of their terms of reference.
”Both the Bill and the task team report have been released for further comment by the public and the industry,” the Treasury said.
Department spokesperson Thoraya Pandy said the task team’s main brief was to look at windfalls in the liquid-fuels industry but if they needed to look outside of that, they could do so.
The Department of Finance was not expected to make any announcement on the recommendations of the task team in the near future, the Treasury said. – Sapa