Original source:
Anti-povert groups revealed on Wednesday that mining transnationals routinely deprive African countries of huge amounts of tax revenue that could be used to boost social development.
Investigators found that mineral-rich countries are losing tens of millions of pounds because aggressive mining firms routinely force governments to grant tax subsidies and concessions by threatening to go elsewhere if they are not forthcoming.
The revelations were made in a report entitled Breaking The Curse, the work of a coalition of NGOs including ActionAid International and Christian Aid.
It covers seven underdeveloped Africa countries – the Democratic Republic of Congo, Ghana, Malawi, Sierra Leone, South Africa, Tanzania and Zambia.
The report said that Western firms are often granted low royalty rates because the contracts signed with government officials are often negotiated in secret or government ministries have wide discretionary powers that MPs have no say over.
And it alleges that bosses regularly resort to false accounting, artificially depressing profits in countries where they operate in order to evade tax.
It estimates that low royalty rates have or will cost South Africa, the continent’s biggest gold producer, up to $359 million (£246m) a year in revenue.
Another top African gold producer, Ghana, is losing $68m (£47m) a year and Tanzania, the continent’s third largest producer, $30m (£21m) a year which could have funded health care, education and other social programmes.
ActionAid pan-African policy manager Brian Kagoro said: ‘One practical step to addressing poverty in Africa is to ensure that all multinational mining companies pay equitable amounts of tax.
‘If they did, governments could fund social welfare programmes with revenue generated from taxes rather than seeking to borrow money externally.’
Mr Kagoro insisted that mining contracts and payments to governments ‘need to be subjected to rigorous parliamentary scrutiny to improve accountability in this sector.
‘And we need to strengthen the capacity of national regulatory tax authorities as well as rationalise international accounting standards to ensure compliance.’
The report warns that the seven countries have lost the chance to collect huge sums from a five-year boom in metal prices that ended last year.
Report editor Kato Lambrechts said: ‘The record amounts various minerals fetched until the bubble burst last year meant little or nothing to ordinary Africans.’
Comments