Windfall Tax Dropped - Prez Mahama

President John Mahama has revealed government was forced to abandon the implementation of the windfall tax regime in the mining sector following threats from major players in the sector.

Finance Minister, Seth Tekper in the 2012 stated government’s plans to implement a 10 percent windfall tax on mining profits.

Despite this announcement two years ago, government is yet to introduce the tax.

But President Mahama speaking at the ongoing World Economic Forum in Davos Switzerland on challenges in the mining sector said threats of massive layoffs by mining companies has forced government to put on hold moves to implement the windfall tax regime in the industry.

He explained that Ghana is having “issues with the big mining companies that are stability agreements that locked in the level of royalties and taxes for us. So when gold prices rose up to a record high we could not earn more.”

According to him, government “introduced a windfall tax which is applied in several countries the mining companies come from for example in Australia and yet they will not allow us to implement a windfall tax in our country. They threatened to lay off workers if we implemented the windfall tax and because we needed the jobs and you don’t want workers laid off you are coerced to go along
So these are major issues we have.”

Early on, the Ghana Chamber of Mines warned that an introduction on the windfall tax could discourage investment in Ghana which is Africa's second-largest gold producer especially at a time when global prices of gold was falling.

Audit & Assurance, Advisory services firm, PwC Ghana has on the other hand expressed worry that Ghana is losing several millions of dollars because the windfall tax proposed by government has not been implemented yet.

Source: citifmonline