A development in Nevada, United States of America (USA), could bolster the government of
Ghana’s initiative to scale up taxation for the mining sector.
Reports monitored on the news portal mineweb indicates that Nevada gold mining companies and the Nevada Mining Association are
rapidly losing ground in their campaign against impending increase in mining
taxes.
Dorothy Kosich, Mineweb's
Deputy Editor wrote on Tuesday April 2, 2013 that Nevada lawmakers were in the process of
dismantling what has been considered a model mining taxation system touted by
the World Bank and the International Monetary Fund (IMF) to developing nations.
According
to her, lifting the taxation cap in Nevada has stirred some mining advocates to
fear it could have repercussions beyond the state’s borders. But at the same
time, proponents of increased mining taxation fear powerful mining companies,
such as Newmont and Barrick, will go to court to stop the initiative.
The news
comes as the government of Ghana struggles to review taxation for the country’s
mining sector. The Chamber of Mines, which the Colorado-based Newmont is a
member of, particularly waged a public campaign in 2012 to resist attempts by
government to introduce three new tax measures. In the process, the Chamber
cited Ghana as the most expensive place to mine across Africa.
In
paragraph 214 of the 2013 budget, Mr Seth Tekper, Minister for Finance and
Economic Planning, indicated that a windfall profit tax Bill tabled in Parliament in 2012 sought to impose
a Windfall Profit tax of 10 per cent on mining companies. “Unfortunately, the
Bill could not be considered by Parliament” and “In the coming weeks,
Government will seek to re-introduce the Bill in Parliament after due
consultation with all stakeholders.”
The 2012
budget had announced that government intended to levy the 10 per cent Windfall
Profit tax as well as increasing corporate
tax rate for mining companies from 25 percent to 35 percent and introducing a
uniform regime for capital allowance of 20 percent for five years for mining in
place of the previous 100 per cent capital cost recovery.
The
measures were particularly considered commendable by civil society groups which
would certainly welcome the Nevada move as the appropriate tonic for Ghana to
go on with its fiscal reforms.
Dorothy Kosich’s story indicates that a steamroller of growing public sentiment may
be convincing members of the Nevada Legislature as the State’s Senate voted
17-4 on Monday April 1 in favour of a proposed constitutional amendment which
will erode nearly 150 years of special tax protections for mining in the one of
the world’s foremost gold mining regions. Only four Republican senators,
including three whose districts include rural counties, voted against the
measure.
“Nevada
presently levies a mineral extraction tax of between 2%-5% of net proceeds for
each geographically separate operation. However, a number of deductions may also
be taken by mining companies,” she wrote.
She
continued that “Despite a two-year advertising blitz by the Nevada Mining
Association, combined with mining companies’ formerly successful strategies of
generous campaign donations, as well as lobbying by the state’s most powerful
lobbyists, a 2011 revelation that several Nevada mines had not been audited for
years by the Nevada State Department of Taxation did not help mining
politically.”
She went on
to narrate that local governments, as well as Nevada’s education system, which
have been hurting for revenue for several years, are strongly pushing state
lawmakers to extract more revenue from mining companies, who, up until the last
year, had been proclaiming record profits and production.
During past
legislative sessions, both educators and local officials were warned by fiscal
experts not to rely on the volatility of the state’s mining sector to fund
mandated services.
More
recently, both major mining companies and junior exploration companies
operating in Nevada have been experiencing either substantial project
write-downs or a lack of available financing for their projects.
Previously,
as politicians and governments of third-world countries developed a powerful
appetite for mining-generated revenue, Nevada mining’s relatively stable
taxation regime has given the state an excellent rating as a place to do
business.
Responding
to a Public Agenda enquiry, Omar Jabara, who is in charge of Corporate
Communications at Newmont in North America, said, “Nevada must reform its tax structure and
broaden its tax base to give the state a more reliable and consistent revenue
source, something the state needs as evidenced by the economic recession which
hit Nevada particularly hard.
“We believe
in reforming Nevada’s tax system to reflect the vast majority of other states
in the US where all industries, not just four, are required to pay broad-based
business taxes.
“We are
committed to working with the state’s leaders to develop a long-term solution
to Nevada’s revenue needs in a way that doesn’t link the state’s fortunes to
the success or failure of a handful of industries.”
On the point of Ghana, Mr Jabara assured that “we are engaged in a voluntary, good-faith dialogue with the Government of Ghana regarding our Investment Agreement, which was approved by Ghana’s Parliament in 2003.”
Originally carried by Public Agenda in its Friday April 12, 2013 edition.
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