Value of concessions by far exceeds taxes from foreign mining companies-Tax Chief

May 13, 2018 News

Chartered Accountant, Chris Ram

…Statia, Ram, Hinds agree with calls to review system
By Kiana Wilburg
On an annual basis, Guyana gives away billions of dollars worth in concessions to foreign mining companies.
But based on the statistical data examined by Commissioner General of the Guyana Revenue Authority (GRA), Godfrey Statia, Guyana is not getting value for its concessions, especially when one considers the taxes collected.
Recently, Statia said that there are some glaring disparities which exist in the system governing concessions. He noted that foreign mining companies have not paid more than $2B “in the last few years.”
Meanwhile, the “concessions given in the last three years exceed that figure by miles.”
The Tax Chief said, “The amount of concessions we give to the gold and diamond mining industry, you don’t get it back. The only thing that you get back, trust me, is the foreign exchange, nothing else…

WPA Executive Member, Dr. David Hinds

The only gain we are getting from the concessions we give to foreign mining companies is through foreign exchange. But while you are considering the concessions on machinery and equipment, remember that they get millions of dollars in concessions on fuel…”
Statia continued, “It’s the big, foreign miners who are actually benefitting. It is the big miners who are getting rich…Indeed, there is a distortion in the concessions system, big miners versus small miners; because those who produce less than 1000 ounces gold get no concessions but big miners producing above 5000 ounces get a lot of concessions.”
The GRA Commissioner General also noted that foreign companies need to employ more locals to provide services for them in the supply of consumable items, spares and equipment.
ECONOMIC DISPARITY
When concessions begin to create or exacerbate economic disparities, then a comprehensive review of the system is warranted. This is according to Chartered Accountant and Attorney-at-law, Chris Ram.
He made this comment upon reflection of the fact that locals are not able to benefit from the same concessions as foreign companies.
Ram stated that concessions should be incentives to meet particular developmental objectives, one of which will be growth.
The Chartered Accountant said that when one considers the value of concessions given to the mining sector, several factors must be brought into the mix.
He said, “We should ask ourselves if these concessions translate to growth, are they translating into employment generation, into tax revenues, into the development of certain areas in the regions? All these have to be considered.”

GRA Commissioner General, Godfrey Statia

The Chartered Accountant added, “But concessions ought to be able to level people up because of the disadvantageous circumstances they have to start from…But they should not be used to create or exacerbate economic disparity. It should do the opposite and perhaps, we need to have a whole rethink of the objective and basis of concessions.”
On the question of transparency, Ram told Kaieteur News that under the Investment Act, the Auditor General is required to conduct an audit of certain types of incentives. Ram said that this report is supposed to be tabled in the National Assembly.
“…It is important that we have transparency, clearly defined objectives, criteria and procedures where concessions are concerned. It should not be discretionary. If you meet certain conditions, then you should get concessions and this should be across the board,” the anticorruption advocate noted.
Executive Member of the Working People’s Alliance (WPA), Dr. David Hinds is also of the firm belief that there should be a review of the concessions that are granted to the mining sector as well as a comprehensive policy that has a 50/50 matrix or approach to it.
Dr. Hinds commented, “We need a matrix that ensures balance. We cannot make it so attractive to foreign companies that we ignore the interest of local companies. In the absence of a policy, we have chaos taking place.”
The University Professor also pointed to the fact that an excavator is one of the most fundamental instruments to local miners. Yet, they are made to pay the full tax on this piece of machinery while foreign companies enjoy uncapped concessions. He said that Government must move towards bringing an end to this type of inequality.
The WPA Executive Member also called for the Government to move in the direction of transparency and publish all of the concessions granted to the mining industry, among others.
Dr. Hinds said, “We have to move in the direction of transparency. It is important economically and politically. In fact, there can be no economic development without transparency. So the government must make public, all concessions and agreements it is signing…”