Cape Town, South Africa — 15 February, 2013 – The government of South Africa is to review its mining royalty regime as part of a wider study on whether the country’s tax system is generating enough revenue to pay for public services, says President Jacob Zuma.
Finance minister Pravin Gordhan will commission a study of current tax policies later this year, Zuma told lawmakers here last night in his State of the Nation speech.
The review is “to make sure that we have an appropriate revenue base to support public spending,” he said. “Part of this study will evaluate the current mining royalties regime, with regard to its ability to serve our people suitably.”
Bloomberg News reports that with elections due to take place next year, Zuma is under pressure to do more to cut a 25% unemployment rate and to address income inequalities that rank among the highest in the world. At the same time, investor confidence has dropped after a series of mining strikes and the shooting of about 34 protesters by police at Lonmin plc’s Marikana platinum mine last year.
The ruling African National Congress agreed at its December conference to reject a call from some of its members to nationalise mines in favour of raising taxes on mining companies.
Mining output contracted for a fourth month, dropping 7.5% in December from a year ago, the statistics office said today. Nine loss-making platinum-mine shafts were shut in the second half of 2012, according to the Department of Mineral Resources, while Anglo American Platinum Limited, the world’s largest producer of the metal, last month announced plans to idle four shafts, which may result in as many as 14,000 job losses.
Zuma said he had met Sir John Parker, the chairman of Anglo American plc, which controls Anglo American Platinum, two weeks ago to discuss the planned job cuts.
South Africans are losing faith in the government. A poll by Ipsos research company shows that 52% of the 3,446 adults surveyed between October 26 and December 7 last year thought the state was performing well “’ down from 61% in May.
Africa’s largest economy is likely to expand 2.5% this year, less than half the pace of more than 5% that’s needed to meet the government’s job-creation goals, Zuma said.
Source: Bloomberg News. For more information, click here.