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The African National Congress (ANC) has proposed a tax on mining companies that should raise R40 billion for the South African government.
The Resource Rent Tax is a 50% taxation on any mining company’s profits that exceed 15% return on their investment.
Sowetanlive reported that a concerned party, that includes mining giants Da Beers, Namkwa, Anglo Gold, Gold fields, Wesizwe, Xtrata, Rio Tinto and BHP Billiton, warned the ANC “that proposals to increase tax levies on mining companies will result in mine closures, job losses, and place the mining sector at ‘tipping point’ of collapse.”
The tax, which is to be debated tomorrow, was suggested at the behest of a ‘State Intervention in the Minerals Sector’ report as an alternative to nationalize, which is not a feasible alternative as South African cannot afford to pay the compensation needed to nationalize on a mass scale.
With the debate on the horizon it is expected that proponents will reaffirm that the tax simply allows the African nation a greater share of histrionically high earnings in the mining sector and that concerned mining company’s will point out that this tax would likely cripple the region’s already under-performing mining sector.
Mzukisi Qobo, a political risk analyst, figures that the debate should focus on something else, the need to foster confidence in an attempt to secure South Africa’s future in the mining industry.
As quoted by Miningweekly, Qobo says “the ambiguities in the Sims report around the RRT, the functions of the State mining company, the nature of strategic minerals and the slew of regulatory institutions, do not inspire confidence. Instead, they compound confusions.”
Read more on South Africa’s super tax announced earlier this year >>
