Export taxes will destroy more jobs in mining sector

02 July 2014

Reports this morning that the ANC is considering the introduction of export taxes on key mining exports like platinum group metals (PGM) and iron ore could have a further destabilizing effect on the industry, and will cost more jobs. 

I will write to the Minister of Trade and Industry, Rob Davies, and request that he clarify whether new export taxes are indeed the government's intention. Furthermore I will write to the Trade and Industry Portfolio Committee Chairperson, Joanmariae Fubbs, to ask that the Minister brief the committee as well.

The Minister should also clarify whether an impact assessment has been done to determine what impact export taxes will have on jobs and economic growth in South Africa.

Government's constant policy shifts have left the industry feeling uncertain, which undermines further investment and compromises the job creation imperative. 

Today's reports only add to the policy uncertainty and undermine investor confidence in the sector. Government needs to provide clarity on the matter urgently.

The fact is that South Africa has a large trade deficit, and that if we are to grow our economy and create more jobs, we need to encourage the expansion of exports.

An export tax does precisely the opposite. By making it more expensive to export South African raw materials, an export tax would lead to less exports, a bigger trade deficit, and ultimately a decline in mining production. This, in turn, means less jobs. 

If the purpose of the export tax is to raise government revenue, then it will be counterproductive. If the intention is to force local beneficiation, then this is a poor way of going about it. Beneficiation should after all create jobs and expand exports, not shrink exports and destroy jobs.

Statement issued by Geordin Hill-Lewis MP, DA Shadow Minister of Trade and Industry, July 2 2014

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