…but gov’t worried about gold smuggling
SMALL and medium-scale miners are reportedly in high spirits now that their longstanding crusade for a lowering of the Tributor’s Tax is over, with the government finally conceding to a 10-per-cent cut. However, government is concerned about the rate of gold smuggling and will soon deploy wardens in mining areas to strengthen enforcement efforts.
Minister of Finance, Winston Jordan, made these comments on Monday during his presentation of the 2018 Budget to the National Assembly. According to the minister, the decision was made following strong representation by the Guyana Gold and Diamond Miners Association (GGDMA) throughout the year to have the tax reduced.
GGDMA President, Terrence Adams, expressed satisfaction at the government’s decision to reduce the tax by half of what it once was, saying that 20 per cent was too burdensome on small miners in particular.
“This will not only benefit small miners; it will benefit all miners,” Adams told the Guyana Chronicle by telephone on Monday evening.
When questioned about other aspects of the budget that may redound to the benefit of the mining community, Adams said he will be better able to pronounce on that after the executive arm of the GGDMA meets today.
The reduction in Tributor’s Tax is, however, expected to take effect from January 1, 2018, but the minister indicated that tributors will continue to file their annual tax returns and pay any taxes due or be refunded as appropriate. Jordan said that both the Guyana Revenue Authority (GRA) and the Guyana Geology and Mines Commission (GGMC) will intensify their efforts to bring operators in the industry within the tax net.
That is expected to be done, since the minister announced that there will be a replacement of the current two per cent of the gross proceeds regime with a sliding scale percentage that is based on the price of gold.
“Operators in this industry will continue to keep records in keeping with the provisions of Section 33E (5) of the Income Tax Act, Chapter 81:01, which states, ‘Nothing in this section shall be construed as exempting a gold or diamond miner from the requirement to keep adequate records of the income from mining operations,’” Minister Jordan announced.
The gold and diamond industry has, however, been making a valuable contribution to the country’s Gross Domestic Product (GDP)income, export earnings and employment.
In recognition of this, the government had enabled small and medium-scale miners to benefit from tax concessions on machinery, equipment and fuel, and a waiver and remission of taxes on vehicles, based on gold declarations. Jordan, during his budget presentation on Monday, said that for 2016, a total of $47.6M in taxes was waived on motor vehicles, while for 2017, such waivers have amounted to $64.4 million for personal motor vehicles and $188 million for fuel so far.
Many operators in the sector have also been approved to hold foreign exchange retention accounts, in that instead of the standard 10 per cent, they have been allowed unlimited retention of foreign exchange to purchase mining equipment.
Meanwhile, Jordan noted the admirable performance of the gold sector in 2016 will be replicated in 2017, and is expected to be surpassed in 2018. However, production levels are thought to be much higher than declared, with thousands of ounces reportedly smuggled out of the country each month. “Not only is this hampering our nation‘s development, it also casts a shadow over other law-abiding miners. To help address this problem, 41 trained wardens/compliance officers will be deployed to mining areas, in 2018.”
These officers, Jordan said, have been vested with the powers of various categories of law enforcement and are tasked with enforcing mining regulations and other relevant laws. The work of these wardens will supplement the efforts of Guyana Geology and Mines Commission (GGMC) to reduce the incidence of illegal mining and to improve compliance. Also, a set of incentives to encourage higher declarations will be announced shortly.
The minister said although there have been fewer fatal accidents in this sector, priority will be placed on promoting occupational health and safety standards and industry best practices. “In the new year, Government will continue to support the Guyana Mining School and Training Centre which has been training miners and staffers of the sector in areas such as occupational health and safety, environmental management, exploration and geological techniques, and improved recovery practices.” Additionally, to reduce the risk associated with the use of mercury in mining to human and environmental health, the importation and use of mercury will be regulated in 2018, with a view to reducing its use.
Touching on the bauxite industry, Jordan said it is anticipated to benefit from added productive capacity as a new mine is slated for construction at Bonasika, in 2018. Approximately US$50 million is expected to be sunk into this project, which is expected to employ more than 150 workers.
The mine is envisaged to commence production in 2019.
Manganese is also expected to be in production, thus contributing to economic growth for the first time in over 40 years. Jordan said preparatory works, including the rehabilitation of roads, has already begun, and about 1,200 persons will be employed during the construction phase. When the mine becomes operational, between 300 and 400 individuals will be gainfully employed, thus benefitting Matthews Ridge and surrounding communities.
