ANC Study said to propose South Africa mine Resource-Rent Tax
A study into mine nationalization ordered by South Africa's ruling African National Congress proposes a 50% resource-rent tax rather than taking over operations, a party official who has seen the document said Saturday.
Previous ANC discussion documents defined resource-rent taxes as a levy triggered once the expected rate of return had been attained on an asset.
Nationalizing the country's mines would be too expensive for the government because it would cost almost 1-T Rand (US$131-B), according to the study, the official, who declined to be identified because the document has not been made public, said.
The party instituted the study after its youth wing leader, Julius Malema, proposed that the government take over mines and banks because the Black majority is not deriving enough benefit from them.
South Africa is the world's biggest producer of Platinum, Chrome and Manganese and supplies coal to power plants in Europe and India.
In April 2010, Citigroup Inc. (NYSE:C) valued the Country's mineral resources at US$2.5-T, the most of any Nation.
There is a belief that the mining industry in South Africa has not delivered what people thought it would, such as a wider distribution of the country's wealth, it is likely to result in change.
The study also proposes a 50% capital gains tax on the sale of mineral rights before the start of mining to discourage speculators, said the official. The tax would also apply if a company changed ownership before a mine had been dug.
If adopted by ANC leaders the study will influence policy documents to be discussed at a party conference in June. Final decisions on economic policy will be made at its national conference in December.
The ANC's youth wing has also called for the seizure of land in South Africa, where more than a 25% of the population is unemployed.
The ANC, led by President Jacob Zuma , has said mine nationalization is not government policy. The report, which was written by 3 economists, is aimed at guiding the ANC's nationalization debate.
Paul A. Ebeling, Jnr.
Paul A. Ebeling, Jnr
Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster's Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.
Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels. www.livetradingnews.com