Study highlights mining’s contribution to state coffers

The state received US$301million in taxes from nine mining companies which took part in a study, conducted by PwC and sponsored by the Ghana Chamber of Mines, to assess the industry’s contribution to the economy.

Of the amount, US$121million consisted of profit taxes and US$113million of mining-specific taxes including royalties. The figures are a measure of the cash-taxes paid by the mining companies, covering both taxes borne and taxes collected.

The report said the total tax contribution made by the nine companies was 9.6 percent of government’s total tax revenue in 2010.

Titled ‘The Total Tax Contribution of Mining Companies in Ghana’, the report, according to the Chamber of Mines, is aimed at enabling the public to monitor the mining industry’s contribution to the country’s economy.

Mr. George Kwatia, Tax Partner at PwC presenting the report in Accra, explained that on average a mining company pays 12.8 percent of its gross revenue as taxes borne and collected to government.

He said mining companies also made other contributions to society and the communities where they have their operations.

“Based on the data provided by the participant mining companies, most of the contributions were made toward construction of schools, roads and alternative livelihood initiatives such as palm plantations and health posts.

This voluntary contribution is equivalent to 32 percent of the total corporate tax payments made by the survey participants.”

The report said the industry, as a major employer, pays taxes and mandatory social security contributions on behalf of its employees. The companies also serve as withholding tax agents for the state in respect to the employment income paid to employees.

In 2010, total employment taxes borne and collected by mining companies on behalf of employees averaged US$4,200 for each employee -- with the study noting that this figure is higher than the country’s per capita income of US$1,370.

Dr. Toni Aubynn, Chief Executive Officer of the Ghana Chamber of Mines, said the study underscores the fact that the industry makes significant contributions to national development.

Mr. J.K Anaman, former President of the Chamber of Mines, said the publication is timely as it presents a more detailed analysis of the industry’s contribution to the economy than previously provided.

The Chamber of Mines revealed this month that total investment inflows into the mining sector increased from US$770million in 2010 to US$780million in 2011, while the total mineral revenue of producing-member companies of the Chamber rose from US$3.7billion in 2010 to US$4.8billion in 2011 -- an increase of 28%.