Francis Timore-Boi, a tax consultant, has expressed support for mining firms opposing the recent increase in the Growth and Sustainability Levy, citing the government’s failure to consult industry stakeholders.
He acknowledged that Ghana is facing significant “fiscal pressure since 2023” and understands why the government is looking for ways to close the financial gap.
However, he argued that the concerns of mining firms, especially regarding the lack of engagement, are valid.
Timore-Boi explained that mining companies have long benefited from stability clauses, shielding them from new tax burdens. “The stability clause means that anytime there are some new taxes, you are shielded. You don’t suffer the tax.”
Additionally, mining firms have enjoyed tax exemptions on imported equipment and materials, further reducing their financial obligations to the state.
Given the sector’s strong contribution to Ghana’s economic growth—playing a key role in the country’s 5.7% GDP growth—Timore-Boi suggested that the government sees the industry as a natural source of additional revenue.
However, he stressed that the main issue is the lack of consultation.
“If the government engages them and lets them know that, ‘the money that we are going to get is going to fix this particular issue that we have in this country’, I think people will buy into it.”
Francis Timore-Boi
Meanwhile, the tax was supposed to originally end in 2025, but an extension to 2028 has raised further concerns among stakeholders.
“So, engage the people and let them understand,” Timore-Boi urged, emphasizing the importance of clarity and consensus-building.
The tax consultant also highlighted that the Growth and Sustainability Levy has evolved over time.
“You remember, in 2001, we used to call it the National Reconstruction Levy. Then, in 2008, we changed the name to National Fiscal Stabilization Levy. Now, we call it the Growth and Sustainability Levy.”
Francis Timore-Boi
Timore-Boi suggested that mining firms, having previously been exempted, should have been properly engaged before being added to the tax base.
Impact on Profitability and Sustainability
Mining companies argue that the government already takes more than 50% of their profits, and this new tax will further affect their sustainability.
Timore-Boi noted that the new tax “is going to impact on them.” However, he observed that Ghana is facing an economic crisis and needs to raise revenue.
“So, if you have a problem to fix, you are supposed to contribute a little. We [must] make you understand and we get your buy-in.”
Francis Timore-Boi
The consultant pointed out that the 3% levy applies to production rather than profits, which could significantly affect mining firms’ finances. “[The government] could have engaged them [mining companies] and said, if 3% is too much, we could do maybe 2%.“
Despite the concerns, Timore-Boi acknowledged that the mining sector remains profitable, especially with rising gold prices.
“And if you are a government and you are experiencing revenue shortfalls and you need some money, you certainly have to engage them and see how they can also contribute.”
Francis Timore-Boi
He noted that gold prices, which were trading at a little over $2,000 an ounce last year, are now approaching $3,000, which could help offset the impact of the levy on mining firms.
Timore-Boi moreover suggested that the tax is supposed to be temporary. “If they’re able to convince the miners to accept the 3%, I believe that the government will get some substantial amount”
However, he warned that failing to properly explain the tax to new investors could damage Ghana’s reputation as a mining-friendly country.
“If we don’t interpret this new increment to them very well, new investors will consider Ghana’s mining sector as very hostile, and they may consider either going to places like Burkina Faso and Mali, where they may have some favorable tax regimes.”
Francis Timore-Boi
He advised that, for existing companies, clear communication would be crucial. “If we’re able to make them understand,…they may buy in.”
Timore-Boi also acknowledged that mining firms may not have much choice, as some stability clauses have expired, and the government has the power to impose taxes.
“So overall, you may not have a choice as much. It’s an agreement, and Parliament has the power to pass the law. Let’s see what engagements will do.”
Francis Timore-Boi
He concluded by urging dialogue over confrontation, emphasizing the need for constructive discussions.
The government’s decision to raise the Growth and Sustainability Levy stems from the pressing need to boost revenue amid Ghana’s fiscal difficulties.
However, its failure to engage stakeholders demonstrates a lack of good faith.
Finding a balance between revenue generation and business sustainability will be essential to securing the long-term stability of both the mining sector and the broader economy.
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