DEPUTY Finance Minister Nhlanhla Nene says the government will not be reckless in changing the mining tax regime, should the African National Congress (ANC) national conference resolve to do so.
Speaking at a business breakfast at the conference venue in Bloemfontein, Mr Nene said on Monday: "If anything comes out of the ANC conference that requires us to change mining taxes we will go through a process of consultation. We will not be reckless. We are never reckless with changes to tax policy."
The conference will on Tuesday discuss how the country can better benefit from the country’s mineral wealth. There are broadly two positions in this debate: outright nationalisation, championed by a minority of ANC Youth League members and some trade unionists; and strategic nationalisation, which will allow nationalisation on a case-by-case basis, depending on the evidence.
Within the majority view, which was also the one adopted by the ANC policy conference in June, there are two approaches. One is that the decision on the kind of tax that is implemented is a "technical" one and should be left to the experts in the Treasury. The other is the argument that the ANC should explicitly endorse a "supertax" on above-average returns as well as a long list of other recommendations contained in a research paper commissioned by the ANC and published in February. This will be fought out on Tuesday.
Business representatives at the meeting also raised a range of other concerns with Mr Nene. Investec CEO Stephen Koseff appealed to government to take the decisions of the global credit ratings agencies seriously as a further ratings downgrade would damage South Africa’s ability to attract investor money.
"If we slip any further down the ladder it will put us on the cusp where we slip below investment grade. We must turn it around and stabilise our rating. We were on a good path but that has changed in the last few years. Government needs to recognise the importance of these guys (credit ratings agencies), " he said.
Mr Nene responded defensively to the question, saying recent downgrades were not a reflection of South Africa’s economic fundamentals, especially its fiscal policy.
"In the run-up to this conference there has been some unfairness. If you look at what was coming out of rating agencies, it was an attempt to influence the outcome of the conference. We were downgraded on the eve of the tabling of the medium-term budget policy statement. What does that say about our budget stance or debt sustainability? We are nowhere were Greece is," he said.