The Ghana Chamber of Mines is urging the government to reconsider its position on the proposed royalty increase for the mining sector. Dr. Ken Ashigbey, CEO of the Chamber, says the industry is not opposed to the sliding scale, but is concerned about the timing and context of the proposal.
Speaking in an interview after a media engagement in Accra, Dr. Ashigbey explained that the Chamber has had initial discussions with the government, including the Finance Minister, but more engagement is needed to find a mutually beneficial solution.
We are not averse to the sliding scale, the challenge is at what point you're putting the sliding scale, and the context in which you are putting us," he said.
A sliding scale tax is a type of tax system where the tax rate increases or decreases in line with the value or profitability of a particular activity, such as mining. In the context of the mining industry, a sliding scale tax would mean that the tax rate would be adjusted based on the price of the mineral being extracted, such as gold or lithium.
For example, if the price of gold is high, the tax rate might be higher, and if the price is low, the tax rate might be lower. This approach is designed to ensure that the government receives a fair share of revenue from the mining industry, while also taking into account the industry's need for stability and predictability.
Dr. Ashigbey highlighted the country's high effective average tax rate and the potential impact of the proposed royalty increase on the industry's sustainability. He noted that the industry is already facing challenges, including the growth and stabilization levy, and the corporate income tax.
The Chamber is calling for a more comprehensive debate on the issue, taking into account the government's policy objectives and the industry's concerns, to ensure Ghana remains a competitive destination for mining investments.
We need to put a break on the process and have a more nuanced discussion to find a sweet spot that works for both the government and the industry," Dr. Ashigbey urged.
He emphasized that the goal should be to ensure the sustainable development of the industry, which would enable the government to achieve its revenue goals while also creating jobs and promoting economic growth.
The Chamber's concerns come as the government is pushing to increase its revenue from the mining sector, particularly with the lithium deal currently under negotiation. Dr. Ashigbey stressed that while the industry is committed to contributing to the country's development, it is essential to find a balance that works for all parties involved.
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