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South Africa Committee to Review Mining Taxes, Gordhan

South African mining taxes will be reviewed as part of a broader investigation into the appropriateness and effectiveness of the nation’s tax system, Finance Minister Pravin Gordhan said.

In December, the ruling African National Congress rejected proposals to nationalize mines in favor of higher taxes in the world’s largest producer of platinum and chrome, and instructed the government to research an appropriate dispensation. Gordhan first announced plans to establish a tax review committee when he released his budget on Feb. 27.

“We want to understand better how can the tax system also make a contribution to inclusive economic growth, employment creation,” Gordhan told reporters today in the capital, Pretoria. “We want to protect the mining sector as much as possible and ensure the sustainability of the mining sector in an operational sense and in a sense of investments being attracted to our country.”

The eight-member committee will be headed by Judge Dennis Davis, head of the country’s Competition Appeal Court.

The mining industry has been rattled by a series of strikes since last year that have curbed output. With wage negotiations currently under way there are no signs of an end to the unrest.

While “the mining sector in South Africa is facing considerable challenges,” the effect of the labor upheaval on the budget deficit has yet to be determined, Gordhan said. “Things can move up or down in a space of a few months. We cannot actually forecast what will happen. The picture looks reasonably satisfactory.”

Gordhan had pledged in February to narrow the deficit to 4.6 percent of gross domestic product in the year through March 2014 from an estimated 5.2 percent last year.

To contact the reporters on this story: Andres R. Martinez in Johannesburg at amartinez28@bloomberg.net; Mike Cohen in Cape Town at mcohen21@bloomberg.net

To contact the editor responsible for this story: Nasreen Seria at nseria@bloomberg.net

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