Tanzanian Lawmakers Approve Super-Profit Tax
Source: Bloomberg, David Malingha Doya (6/14/11)
"IMF backs an additional levy on mining projects with 'particularly high' returns."
Tanzanian lawmakers approved a five-year development plan that includes a proposal for a so-called super-profit tax for mining companies, an official in the presidency said.
"The plan has been passed by Parliament," Stephen Wassira, minister of state in the president's office in charge of social relations and coordination, said by mobile-phone text message today. "What follows is to start implementation."
Wassira didn't immediately respond to a question about whether approval of the five-year plan meant the proposed levy would be implemented. Mines Minister William Ngeleja referred questions on the tax to Finance Minister Mustafa Mkulo, who didn't answer his mobile phone when called for comment.
Tanzania vies with Mali to be Africa's third-biggest gold producer and is the world's only known source of the blue gemstone tanzanite. The country's Planning Commission last week published a document that said it may be "optimal" to introduce a super-profit tax in the mining industry as a way to fund a proposed 42.9 trillion-shilling ($27B) economic- development plan. It said the levy may be appropriate "considering the increasing trend in mineral prices."
The commission cited data that showed gold exports from the East African country increased to $1.5B, or 7% of gross domestic product, from $500M over the past five years, while annual government revenue from sales of the metal remained at $100M, or 0.5% of GDP.
The International Monetary Fund's Fiscal Affairs Department held talks with the Tanzania's Finance Ministry about the issue prior to its announcement and backs an additional levy on mining projects with "particularly high" returns, an IMF official said.