Solidarity says that, although the document on mining being discussed at this week’s ANC policy conference, does away with the notion of full-scale nationalisation, there are no grounds for resting easy. The proposed super tax still poses a threat and the union is worried that it could lead to job losses instead of job creation in the industry.
TEXT OF SOLIDARITY PRESS RELEASE
29 June 2012
ANC’s plans for mining could hamper job creation
Although the ANC’s discussion document on mining does away with the notion of full-scale nationalisation and indications are that this stance is being ratified at the ANC’s policy conference, there are no grounds for resting easy. Other ways in which the government intends to bring its power to bear on the mining industry, for example the proposed super tax, still pose a threat, trade union Solidarity warned today. The trade union is concerned that it could lead to job losses instead of job creation in the mining sector.
According to Piet le Roux, senior economics researcher at the Solidarity Research Institute, the proposal for a 50% super tax on profits exceeding more or less 15% would, among other things, discourage new developments. “The ANC is fixated on one-year cycles and is disregarding the fact that mining companies have to bear up during long periods of low profitability in order to benefit only now and then from exceptionally high prices. Further, the possibility of high profits is desired, as it encourages entrepreneurs to react quicker – rather than slower – to the opportunity to produce useful products and services. The moment the possibility of profit decreases, for example when a super tax is levied, investors’ enthusiasm diminishes along with it. The people who bear the brunt in this case are employees in the mining sector, because they are less in demand, and ultimately the consumers, because fewer goods and services are offered at low prices.”
Le Roux said it would be interesting to see if the ANC’s investment arm Chancellor House would be in favour of paying 50% tax on any return above 15%. “Solidarity is concerned that the ANC is sticking to its view that economic growth must be based in government initiatives. In an already tough economic climate, current and proposed state interference is responsible for inhibiting growth in the mining industry. Economic growth is the result of free competition and cooperation, not domination by the state,” said Le Roux.
Piet le Roux, Senior economics researcher: Solidarity Research Institute
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