KOLKATA (miningweekly.com) - An Indian government task force comprising representatives of the Steel, Mines, and Environment and Forests Ministries was working on modalities for the levy of a Forest Development Tax (FDT) on minerals mined from forested regions.
The FDT proposal comes in the wake of the demand raised by several provinces like Orissa for the levy of a mineral resource rent tax (MRRT) with a minimum of 50% on super profits earned by miners.
The Orissa government had suggested modeling an MRRT along the lines of new mining tax laws in Australia.
However, the objective of the FDT would not be that of an MRRT since defining ‘super profits’ under Indian mining conditions would be difficult within the ambit of existing laws, Mines Ministry officials said.
Working out the basis for calculation of the FDT had proved challenging. According to one mechanism under consideration, the levy would be calculated on the sale value of the mineral extracted. However, while the Indian Bureau of Mines periodically announces the sale value of minerals like iron-ore, chromite and manganese, no standardised sale value was available for several other minerals like bauxite or copper.
A mechanism to collate data and determine the sale value of these minerals would have to be completed first, an official said.
Another vexatious issue facing the task force was the end-use of the fund accumulated through the FDT. One option tentatively being considered was to have the Minstry of Environment and Forests administer the fund but Ministry officials were worried that this could run into opposition from provincial states, which would insist on access to the fund since governance of forest areas fell within the purview of provincial laws.
Under the Mines and Minerals Development and Regulation Bill currently before India's Parliament, it would be mandatory for mining companies to share 26% of profits and 100% equivalent to royalty payments with the local population. These funds were to be allocated to district level authority for spending on project-affected families.
The task force has argued that district level authorities would not have the capabilities for development, redevelopment or maintenance of forests spanning vast geographies and often cutting across provincial borders.
The task force has referred the issue to the Law Ministry since provincial government Forests Departments were not permitted to levy any tax under existing mining and mineral laws.
Moreover, given the rampant illegal mining across the country, it would be daunting to monitor if minerals were being extracted from either forest or nonforest areas since a single reserve often cuts across both types of land. Mines Ministry officials said it was beyond even IBM's capabilities to monitor every ton of mineral extracted from each mine.