The Polish Parliament’s finance committee backed a law that imposes a tax on copper and silver extraction without changing the levy’s rate, allowing lawmakers to vote on the bill this week.
The government plans to raise about 1.8 billion zloty ($566 million) this year and 2.2 billion zloty starting in 2013 through the law, which will be introduced 14 days after it’s announced, according to the Finance Ministry.
Poland wants to cut its state budget deficit in half this year to the European Union’s ceiling of 3 percent of gross domestic product as the bloc’s largest eastern member faces an economic slowdown because of the euro-region credit crisis. The law would directly affect KGHM Polska Miedz SA (KGH), the country’s sole copper and silver producer, which plans to report 11.2 billion zloty in net income for 2011.
Poland can’t afford to lower the tax, Slawomir Neumann, a deputy chairman of the committee and a member of the ruling Civic Platform party, said in an interview yesterday. The lower chamber of Parliament, the Sejm, will vote on the law this week. The ruling coalition has enough votes to pass it.
Shares of state-controlled KGHM plunged 14 percent on Nov. 18 when Prime Minister Donald Tusk announced the plan to introduce the tax in his policy speech.
The tax formula by the Finance Ministry was modified twice after protests from the Economy and Treasury Ministries as well as KGHM. KGHM Chief Executive Officer Herbert Wirth said last month the tax may make output at its Lubin mine, one of its three in Poland, economically inviable.
Poland estimates its 2011 fiscal deficit was 5.6 percent of the country’s gross domestic product.
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