By Joel Scanlon
The African National Congress (ANC) may have decided that nationalization of all the mines in the country is not financially possible but that has not deterred it from planning a ‘super tax’ on mining.
The proposal to set up a 50% mining tax has not been taken kindly by the mining industry or the Democratic Alliance.
Democratic Alliance MP, James Lorimer said that the support of the ‘super tax’ on mining profits by the government was reckless and likely to affect investment. He said that they needed proposals that would attract investment and create jobs so that everyone could share in the wealth of their mineral deposits.
MP Lorimer said that even the debate itself was discouraging investment at the expense of invaluable jobs. He said that there are also other problems with this proposal. A super-tax creates the counter-productive incentive for mines to under-report profits, and a tax on mineral rights sales disincentivises initial investment in mines. A super-tax only kills jobs and investment. The Democratic Alliance (DA) therefore does not support the implementation of such a tax he said.
The proposal for this tax has come after a report was commissioned by the government into the feasibility of nationalizing all the mines in the nation. The Suspended ANC youth league leader Julius Malema had been responsible for the adoption of mine nationalization as a resolution in the youth league conference last year.
It was believed by Julius Malema that the mining sector was unable to benefit the large majority of the black population in South Africa if it were not nationalized. The mineral wealth of the nation, which is considerable, should be used to help the economically weak black sections of the nation. Not an incorrect sentiment, but the way to implement it is somewhat extreme if not downright impractical.