ANC mining tax reckless - DA

2012-02-05 22:30

Johannesburg - The ANC's support of a super-tax on mining profits was reckless and would kill jobs and investment, the Democratic Alliance said on Sunday.

"We need proposals that will attract investment and create jobs so that everyone can share in the wealth of our mineral deposits," DA MP James Lorimer said in a statement.

"Even the debate itself is discouraging investment at the expense of invaluable jobs."

Such a tax would create incentive for mines to under-report their profits and discourage initial investment in mines, Lorimer said.

The focus should be put on policies that made the mining and benefication industries more competitive.

City Press reported on Sunday that an ANC report on the mining industry rejected nationalisation of the sector, but nevertheless proposed fundamental changes.

Nationalisation would be unaffordable, as the government would need to raise R1 trillion to buy out listed mining companies, according to the report. This exceeded the entire government budget.

50% tax

The proposals included a 50% tax on the sale of mining rights to prevent speculation. A windfall tax of up to 50% on super-profits, defined as a return on investment of 22%, was also included. However, the royalty tax would be reduced from four to one percent.

Five ministries - trade and industry, mineral resources, public enterprises, economic development and science and technology - would be merged to form a super-ministry in charge of minerals governance.

Platinum, a strategic mineral, would be nationalised via "targeted interventions", while the government would participate in the industry to a much greater extent, the weekly reported.

The proposals were likely to be adopted by the national executive committee of the African National Congress, to reassure investors concerned about the prospect of nationalisation, City Press suggested.

Suspended ANC Youth League leader Julius Malema was the party's most vocal advocate of putting control of the country's mines in government hands.

It was adopted as a resolution at the youth league's conference last year. The ANC then commissioned a report into the viability of doing this.

Read more on:    da  |  anc  |  ancyl  |  james lorimer  |  julius malema  |  economy  |  politics  |  mining

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