Coordinator Third World Network (TWN), a civil society group, Dr. Yao Graham, has criticised government over its suspension of windfall profit tax in the mining sector.
The Finance Ministry on Monday confirmed that it has put plans to introduce a windfall tax on mining profits on hold – although it has been trying to push the tax through since 2012.
Implementing the windfall tax regime would mean mining companies would be compelled to pay an extra 10 per cent of their profits to government.
Although the move has been welcomed by mining companies as a way of enhancing operations in the sector, Dr. Graham believes there should rather be a policy to ensure the country gets more from the mining sector when gold prices go up.
Dr Graham believes recent fall in gold prices, which has been used as an excuse to resist plans to implement the windfall tax regime, is only temporary.
He noticed further that, “what the [mining] companies would like is that windfall tax is taken off the books and that they use the argument of the current low of the relative drop in [gold] prices? to lock in a tax policy which allows them to continue to get their fat cut”.
The suspension of the windfall tax is expected to excite gold firms but could undermine efforts to reduce the country’s budget deficit.