Only 13% of mining royalties paid by mining companies returned to mining communities – Report



Only 13% of mining royalties paid by mining companies go to the communities where mining takes place.

Of this amount, 4.95% goes to the respective district assemblies while the mining community development program established under the Minerals Development Fund Act receives 4%.

According to the Ghana Chamber of Mines report 2020, 4.05% of mining royalties go to traditional authorities and stools of host mining communities.

Essentially, the share of mining royalties that is used to support development in mining communities is negligible. Clearly, this is woefully insufficient to address infrastructure shortages among the hosts of the country’s mineral wealth.

It is on this premise that the Ghana Chamber of Mines continues to urge the government to increase the share of host community royalties to 30% and earmark it for specific sustainable infrastructure projects in mining communities. .

Ghana Chamber of Mines President Eric Asubonteng said that “the poor condition of mining communities is largely a function of the state of development of the country as well as the outcome of the revenue allocation and use mechanism. taxes derived from the extraction of mineral resources. . Apart from the statutory proportion of mining royalties that is returned to host mining communities, all other tax revenue streams from the mining sector accrue to the central government.

“Apart from the statutory proportion of mining royalties that is returned to host mining communities, all other tax revenue streams from the mining sector flow back to the central government,” he added.

Direct tax contribution from mining

Meanwhile, figures from the Ghana Revenue Authority showed that the mining and quarrying sector regained its position as the main source of direct domestic income last year.

The sector’s contribution to the national fiscal budget increased from GH ¢ 4.013 billion in 2019 to GH ¢ 4.172 billion in 2020.

The 3.97% increase in tax revenues is mainly attributable to the increase in revenue from mining royalties, which partially offset the decrease in other sources of revenue in the sector.

The significant appreciation in the price of gold during the year under review increased revenue from mining royalties by 38.20%, from GH ¢ 1.007 billion in 2019 to GH ¢ 1.391 billion in 2020.

Corporate income tax, however, fell from GH ¢ 2.269 billion in 2019 to GH ¢ 2.139 billion in 2020. Similarly, employee income tax (PAYE) also fell from GH ¢ 736.256 million. to GH ¢ 641.868 million over the same period.

Other sources of revenue for the sector also increased from GH ¢ 674,312 in 2019 to GH ¢ 557.868 in 2020. The share of mining and quarrying in total direct domestic tax revenue was 18.1% in 2020. , which is not significantly different from the 18.3% recorded in 2019.



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