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Zuma announces tax review

Feb 14 2013 20:33

Cape Town - The finance ministry will review its tax regime this year, including looking at mining royalties, to ensure the government is raising sufficient revenue from the economy, President Jacob Zuma said.

"Later this year, them inister of finance will be commissioning a study of our current tax policies to make sure that we have an appropriate revenue base to support public spending," Zuma said in his annual state of the nation address on Thursday.

"Part of this study will evaluate the current mining royalties regime, with regard to its ability to suitably serve our people," he added.

Finance Minister Pravin Gordhan delivers his 2013/14 budget on February 27 against a backdrop of sluggish growth, a stubbornly wide spending gap and turbulent labour relations in the key mining sector.

In an interim budget in October, Gordhan forecast a deficit of 4.5% of GDP for 2013/14, higher than a 4.0% gap projected in February.

Fitch Ratings cut South Africa's sovereign credit rating to BBB from BBB-plus in January, citing rising social and political tensions and the inability of the government to implement effective reforms.

Sapa reported that earlier this month Mineral Resources Minister Susan Shabangu told the Mining Indaba 2013 the country's mining taxes were "competitive", but it was normal to review the regime from time to time and stressed that they should "respond to the needs of the country".

She added, however, that it was not a foregone conclusion that higher taxes would be imposed.

Zuma said he believed that at a policy level certainty had been restored to the mining sector, notably by burying the nationalisation debate at the ruling party's elective conference in Mangaung in December.

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