The government of Ghana last week gave strong acknowledgement of the importance of mining to its economy by becoming a more competitive capital investment destination, albeit on a case-by-case basis.

In the same week, Australians put out an important signal in a paper titled ‘Growing the Australian Economy with a Competitive Company Tax’ that its mining industry will be disadvantaged by its government continuing to impose one of the highest tax burdens on capital investment.

Last year, Botswana did well to defer royalty taxes on a case-by-case basis until commodity prices began showing upward movement.

Smart governments encourage foreign investment and ensure that they do not make it too difficult for companies to invest.

South Africa should take particular note of the moves on the continent and in other mining jurisdictions because the South African government owes it to its citizens to be competitive.

Its counterpart in Ghana displayed enlightened pragmatism in the way it dealt with South Africa’s Gold Fields, which was faced with the prospect of closing the Damang mine. To make itself more competitive, Ghana cut 2.5% off its corporate tax and scheduled the implementation of a sliding royalty scale from January.

In Australia, new research calculates that a cut in company tax benefits wage earners and consumers as well as stimulates new foreign investment.

In Botswana, Minerals Minister Onkokame Kitso Mokaila announced during the thirteenth Botswana Resource Sector conference, in Gaborone, last year that his country would be applying royalty relief for mutual benefit. “What keeps me awake at night is how we enable business to earn a return on their investment and, at the same time, have national benefit,” Mokaila told the conference, attended by Creamer Media’s Mining Weekly.

The latest Australian study recommends that Australia’s 30% company tax rate be cut to 25% and then 20% on the basis that the burden of two-thirds of company tax is shifted onto labour through higher consumer prices, wage cuts and lay-offs.

In Ghana, Gold Fields’ tax rate has been cut to 32.5% and a potential 2% will be cut the flat rate of 5% still in force.

As Chamber of Mines of South Africa CEO Roger Baxter noted at the African Mining Network end-of-year gala event last year, the hard-hit South African mining industry is currently smaller than it was in 1994 and suffered an aggregated after-tax loss of R13-billion in the first half of last year.

“We must take this great industry forward,” he urged, adding that the reason why the South African economy as a whole was not growing to the extent that it should grow was mining’s struggle.

He noted that more than half of the National Development Plan’s problems could be tackled if the country had a growing mining sector and that a far more effective problem- solving relationship with government was necessary to ensure that South Africa did not remain in the bottom half of the Fraser Institute’s rankings, below the Democratic Republic of Congo.