CoM concerned about governance of new tax collection body

THE Chamber of Mines has laid into a Department of Mineral Resources (DMR) proposal in the newly redrafted mining charter that seeks to impose a 1% levy on mining company revenues for community development.

In a statement that also reiterated its view that discussions regarding the mining charter changes were “flawed”, the chamber disclosed that its proposal for a 2% net profit tax had been rejected.

It also said that it had not been given opportunity to discuss the creation of the Mining Transformation and Development Agency. This is the organisation to which proceeds from the revenue tax will be directed.

“The chamber is concerned about its purpose, cost and oversight,” it said.

Comments by Mosa Mabuza, deputy director-general at the DMR for minerals promotion, that it was likely the Chamber of Mines would not drop legal proceedings against the DMR were also questioned.

Whilst there had been progess in respect of setting new ownership targets in the mining charter, these ‘agreements’ had been verbal and made in July.

The Chamber of Mines is positioned to launch a declaratory order through the High Court on the status of once empowered, always empowered which will allow mining companies to claim credit for empowerment deals no longer in existence.

The DMR is anxious for the court case, which it initially supported, not to proceed.

Commenting on the proposed mining tax, the chamber said it was the most regressive form of taxation. “The chamber is of the view that this is simply an additional tax which the multi-national companies will pass on to local mining companies in the form of higher prices, rendering the South African mining industry less competitive than it already is,” it said.

South Africa’s mining sector lost R37bn last year.

It was also critical of new employment equity targets saying that whilst it was in agreement with the notion, there had to be a degree of short-term attainability and practicality to them.