Programme for transparency in mining revenue begins

Accra, July 19, GNA - Tax revenue from Ghana's mining sector is negligible but interest groups have initiated a new programme to streamline revenue and tax that accrue from the sector to ensure openness and accountability.

They are implementing the Extractive Industries Transparency Initiative (EITI), a new programme initiated by the United Kingdom UK Prime Minister Tony Blair in South Africa in 2002.

Cameroon, Botswana, Azerbaijan and Kazakhstan are some of the countries that have signed on so far to voluntarily implement the EITI but Ghana and Nigeria are implementing the EITI as pilot projects for their resources, which are precious minerals and oil.

EITI is a voluntary initiative to focus on company payments, government revenues with non-governmental organisations serving as watchdogs in participating countries with natural resources but where the resources were likely to bring about conflicts of any form.

The German Technical Cooperation (GTZ), which is supporting Ghana's Project in collaboration with the Ministry of Finance and Economic Planning, on Wednesday organized a workshop for revenue agencies, representatives from the mining districts, the Minerals Commission, the Revenue Agencies Governing Board and the Large Taxpayer Unit to crate awareness of the EITI and discuss issues and problems regarding the initiative in the country.

The workshop would among other areas focus especially on the introduction of reporting templates to the relevant revenue agencies and district assemblies.

Organisers expect that the implementation of the initiative would help to reconcile payments by mining companies and revenue receipts by the Government in order to ensure transparency and accountability in amounts received, the recipients and mode of utilization.

Although the country's corporate tax is currently pegged at 25 per cent and is described as globally competitive of the mining companies operating in the country, only five were liable to pay corporate tax in 2004 and four in 2005 while in 2006, only two companies were liable.

According to Mr Chris Afedo of the Large Taxpayer Unit, the reasons for this trend was attributable to the carry forward of losses of concession granted and the accelerated depreciated scheme available to the mining companies.

The accelerated depreciation scheme is applied to mineral exploration rights, building, structures and works of permanent nature, plant and machinery and costs incurred in respect of mining prospecting, exploration and development among other areas considered to be of high risk. The carry forward allows the companies to deduct the tax against income in the subsequent tax year.

Mr Afedo, who spoke on the mineral sector in Ghana and revenue flow, said mining between 1998 and 2005 contributed a little above five per cent to the gross domestic product and gold production in the same period contributed over 30 per cent of the country's export earnings.

Revenue flows from mineral operations to the State within the EITI would focus on corporate income tax (profit tax), mineral royalties, dividends and withholding tax.

Mr Afedo explained that the EITI was to provide transparency in the "legitimate payments by companies to governments, as well as transparency over legitimate revenues by the host countries.

"Comparison of the data should allow detection of discrepancies and so bring about greater accountability."

Mr Amponsah Tawiah, Director of Monitoring and Evaluation, Minerals Commission, said the Government, prior to the launch of the EITI initiative, was practicing an aspect of the initiative.

He said the Government was also embarking on gold auditing process whereby both the Government and industry would have common understanding for the gold that was exported by the mining companies.

The EITI concept, he said, was that the prudent use of natural resources wealth was an important engine for sustainable economic growth that contributed to sustainable development and poverty reduction.

"But if it is not properly managed it could create negative economic and social impacts with untold hardships on the citizens, who rather should have benefited from the natural resource," he said.

Mr Harry Owusu, Executive Secretary of the Revenue Agencies Governing Board, said revenue from natural resources was on course.

He reiterated that without transparency in the mineral sector with regard to concessions; duty on machinery; service delivery and payment of royalties; there could be social acrimony and cited the developments in some communities including the Tarkwa area as examples.

Mr Owusu mentioned some instances where the youth took the law into their own hands and went on the streets over the distribution of royalties and a particular community demanded royalties to the tune of two billion cedis.

There is also the instance where a company left the country without reclaiming the degraded land.

He said by the end of May 2006, money accruing from

mining amounted to 145.2 billion cedis. The Deputy Minister of Mines, Forestry and Lands, Mrs Rita

Iddi said mining played an important role in the economy. It

generated 33 per cent of export earnings, 11 per cent of total

revenue, five per cent of GDP and seven per cent of corporate

tax earnings. She said the Minerals Commission received high revenue

from mining in 2005 and that the industry was also providing

auxiliary jobs for Ghanaians. She said there was the need to broaden the scope of

transparency and accountability. Dr Christoph Habammer of GTZ said so far Britain, Norway,

the Netherlands, France and Germany were sponsoring

projects under the EITI. He said the countries had set up a 5.6 million-dollar trust

fund for the project adding that Germany would support the

creation of a website for the flow of information since the

project was ongoing. It would also give technical assistance

such as training workshops for tax administrators and the civil

society. The theme for the workshop was "Development through

Transparency; Implementing EITI in Ghana". GTZ at the workshop donated a 20,000-euros Nissan

X-Trail four-wheel drive vehicle to support the activities of the

Revenue Agencies Governing Board.