Business News of 2014-02-03

Civil society unhappy with suspension of windfall tax

Dr. Yao Graham, Coordinator of the Third World Network (TWN), a civil society group, has criticised government over its suspension of windfall profit tax in the mining sector.

The Finance Ministry confirmed that it has put plans to introduce a windfall tax on mining profits on hold -- although it has been trying to push the tax through since 2012.

Implementing the windfall tax regime would mean mining companies being compelled to pay an extra 10 percent of their profits to government when they make abnormal profits.

Although the move has been welcomed by mining companies as a way of enhancing operations in the sector, Dr. Graham believes there should rather be a policy to ensure the country gets more from the mining sector when gold prices go up.

Dr. Graham said the recent fall in gold prices, which has been used as an excuse to resist plans to implement the windfall tax regime, is only temporary.

He observed that what the mining companies would like is that windfall tax be taken off the books, and that they use the argument of the current low of the relative drop in [gold] prices to lock in a tax policy that allows them to continue to get their “fat cut”.

The suspension of the windfall tax is expected to excite gold firms, but could undermine efforts to reduce the country’s budget deficit.