Mangaung likely to hold off on mining taxes

INLSA

Erinvale, Somerset-West. 16.11.12. Finance Minister Pravin Gordhan SPEAKS at the WWF South Africa's Living Planet conference held yesterday at the Erinvale Estate hotel in Somerset West. Picture Ian Landsberg

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Donwald Pressly

The upcoming ANC elective conference in Mangaung is likely to stop short of imposing specific new taxes on mining but will instead back a resolution taken in June that the state “must capture an equitable share of mineral resource rents” in order to promote transformation, economic growth and development.

While economic transformation committee head Enoch Godongwana told Bloomberg that the ANC would opt to lift mining taxes, the issue is likely to be dealt with by the new national executive committee (NEC) after the conference. It will ultimately be Finance Minister Pravin Gordhan who will fine-tune any new taxes.

It was proposed in a State Intervention in the Mining Sector (Sims) document put to the June policy conference that a super-profit tax be imposed on mining, but the conference watered down this proposal.

Godongwana’s committee, which released the economic transformation documents online, specifically states that “some of the recommendations contained in the Sims report do not require consideration by conference but will be referred to the NEC lekgotla [normally in February] for ‘actioning’ because policy already exists”.

This would imply that a key threat to mining looks set to be off the table at the conference.

While DA parliamentary leader Lindiwe Mazibuko opted to give Gordhan a B score in her government report card, for a number of reasons including his failure to implement a youth employment training subsidy, the policy conference did not rule this option out. The youth subsidy has been bitterly opposed by Cosatu ,which believes it would undermine existing, older employees.

The resolution on youth employment said “extraordinary measures are required to address youth unemployment… there are far too many young people who are out of work and these numbers are growing daily”. Urgent action was needed, the conference noted.

As a puff to Cosatu, the resolution said “all these proposals aim to bring new entrants into the workplace, while still protecting the jobs and conditions of existing workers”.

Iraj Abedian, one of the co-authors of the Growth, Employment and Redistribution policy, said many of the positions taken on economic policy were just a “mask” of the government’s failure to deliver.

Thus, the real economic by-products of poor delivery by the government, including road potholes, poor education, were cast behind a veneer of discussions about “a super-tax” on mining profits.

“The irony of this is that most mining companies are simply making losses. One can forget about a super-tax… we can hardly collect the tax [from the mining firms].”

Referring to the notion of the national democratic revolution, Abedian said there should be a revolution of government “to deliver services”. The tax money collected should be appropriately spent on putting services in place “as opposed so siphoning it off through tenders and corruption”.

The policy conference document said “commissions” were engaged in robust yet “comradely debate on the question of the nationalisation of mines and other sectors”.

In September ANC secretary general Gwede Mantashe said at the Cosatu congress that the issue was back on the national agenda. However, he referred to the identification of “strategic assets” in the minerals sector for nationalisation. Once that was done the process to nationalise them would be debated at next week’s conference.

A state coal mining firm is up and running and Alexkor is involved in diamond mining.