Government urged to consider tax credit scheme

Government has been urged to consider the adoption of a Tax Credit Scheme for the development of infrastructure in mining communities to stem the confrontation and mistrust among the companies and host communities.

Mr. Samuel Adam, Executive Director of Integrity and Excellency International, a management and financial consultancy, who made the call, said the scheme could help change public perception that the country does not derive any benefit from the exploitation of mineral resources.

The scheme allows the government to use Resource Developers as “Contractors” to implement infrastructure projects and subtract the cost from the tax they owe to government.

Citing the example of Papua New Guinea where he had worked for more than 20 years in both mining and government sectors, Mr. Adam said the scheme had helped to provide the needed infrastructure in the island country.

He said since government was unable to use its annual budgetary allocations to meet the growing demand for infrastructure development in these areas, the scheme should be seriously considered to ensure cost effective and efficient implementation of projects in host communities.

Dr Toni Aubynn, Chief Executive Officer of the Ghana Chamber of Mines, said mining had been making huge contributions to the country and it is sad that people would say that they had not seen the benefit of mining to the country.

He said these comments were perhaps based on the exaggerated expectations people have about mining companies, emphasizing that the sector is the greatest contributor to taxes and Gross Domestic Products.

Dr Aubynn said the absence of a national mining vision and policy over the years and the paltry amount of royalties government transfers to the mining communities did not augur well for the development of infrastructure in mining communities.

About 80 per cent of all mineral proceeds are retained by the Central Government and less than 10 per cent goes to mining communities.

He said since mining revenue and royalties goes directly into the Consolidated Fund, there is no effective tracking of what the revenue from mining is spent on.

Last year, mining contributed about $540 million to Ghana Revenue Authority representing 27.61 per cent of total domestic revenue.

The sector paid $360 million in corporate tax, representing 38.26 per cent of the total company tax collected in 2011.

Dr Aubynn said the sector also voluntarily contributed about 27 million dollars to the communities within which they operate.