Mining industry protests ‘extreme’ levy increase

By Joshua Worlasi AMLANU

The mining industry has raised serious concerns over the government’s decision to triple the Growth and Sustainability Levy from one percent to three percent on gross production, warning that the move could significantly erode investor confidence and undermine the sector’s long-term stability.

The increase, announced as part of Finance Minister Dr. Cassiel Ato Baah Forson’s 2025 Budget Statement delivered to Parliament on Tuesday, will extend the levy until 2028, shocking industry leaders who claim they received minimal advance notice and no meaningful consultation.

Sulemana Koney, Chief Executive Officer (CEO) of the Ghana Chamber of Mines, criticised the government’s approach, saying the industry was blindsided by the policy shift.

“What concerns me most is the lack of consultation. I am aware of companies actively seeking investors to expand their operations and take advantage of high gold prices. Some of these investors have even approached me. Yet without warning, the government introduces a policy like this. We were only informed briefly yesterday (Monday) around 5:30 PM, with no clear explanation of the basis for this decision,” he explained.

According to Mr. Koney, the government had previously suggested only a marginal increase in the levy. The decision to move from one percent to three percent, he said, represents a drastic shift that could impact both existing and prospective investments.

“We understand the economy is struggling, but should the burden fall disproportionately on businesses that are already contributing through various taxes and levies?” he asked.

President Mahama, during a speech at the National Economic Dialogue, hinted at a one percent adjustment, which was the expectation.

Instead, the levy has been tripled.

Tax Expert at KPMG, Kofi Frempong-Kore, expressed concerns about mining sector tax policies during KPMG’s post-budget panel discussion.

“The government has created an imbalanced tax structure by eliminating the 1.5 percent withholding tax for small-scale miners—operations often linked to environmental damage and tax non-compliance—while increasing the Growth and Stabilization levy from 1 to 3 percent on established mining companies,” Frempong-Kore stated.

He noted that these established companies already meet their tax obligations through royalties, VAT, and a 35 percent income tax rate.

“Adding a non-deductible 2 percent GSM levy effectively rewards environmentally harmful operations while penalizing compliant businesses,” he said. “This contradicts our ESG commitments and unfairly burdens those already contributing their fair share to national revenue.”

Government’s rationale

The Finance Minister defended the decision, arguing that Ghana has not sufficiently benefitted from its natural resource wealth. He pointed out that while natural resource rent accounts for about 14 percent of gross domestic product (GDP), revenue from the extractive sector contributes only 1.5 percent of GDP.

“We have failed to leverage our natural wealth by capturing its rent and channelling it toward productive infrastructure and human capital,” Dr. Forson said.

“Whereas global gold prices have seen some significant increase in recent times, Ghana has not been able to take full advantage of this development,” he added.

He further stated that increasing the levy and extending the sunset clause to 2028 would ensure the country receives a fairer share of the windfall from high gold prices.

Industry warns of investment risks

Mining executives argue that beyond the immediate financial burden, the unpredictability of fiscal policies creates an unstable business environment.

The levy, which applies to revenue before cost deductions, could significantly impact profitability, making Ghana a less attractive destination for mining investments.

“Investors need stability and predictability,” Dr. Koney said.

“Ghana has long been known for political stability and smooth transitions of power, but uncertainty in fiscal policies undermines that advantage. When businesses cannot plan long term due to abrupt tax hikes, it affects confidence in the entire investment climate,” he remarked.

The industry is also concerned about the potential for further extensions to the levy, which was originally set to expire in 2025 but has now been prolonged to 2028. Some executives fear the government may continue extending it indefinitely.

“On top of existing royalties and other payments, the government is now imposing an additional three percent charge, which is non-deductible,” Mr. Koney said.

“It’s a mandatory payment that directly reduces profitability and business viability. The original sunset clause was 2025. Now, it’s being extended to 2028. Who’s to say it won’t be extended further?” he quizzed.

The post Mining industry protests ‘extreme’ levy increase appeared first on The Business & Financial Times.

Read Full Story