High taxation coupled with additional load in form of GIPF & DMF make mining unviable
The mining companies are reeling under serious burden of high taxation coupled with additional load in form of Goa Iron ore Permanent Fund (GIPF), which is been set up as per directions from the Supreme Court in addition to the District Mineral Foundation (DMF), which is set up in both the districts as per the MMDR Act amendment. Both the funds look at the intergenerational equity and livelihood support for families affected by mining and hence double the levy on the mining firms for achieving the similar goal.
“GIPF has lost its relevance with introduction of DMF. Moreover, it should be emphasized that the funds have merely become another source of revenue for the government rather than it being used to improve infrastructure, livelihood and living condition of the people around mining areas,” a source from mining industry said.
Goa has collected over Rs 300 crore through GIPF and DMF but its spend on activities related to mining has been negligence. Fact is that Government is yet to set up even a committee to approve spending in the affected areas.
“On the other hand, the dual levy on miners has increase tax incidence on them at a time when the mining industry is trying to recover from a slowdown and the prices in the export market have just started to picking up,” sources said.
Iron ore miners in India are burdened with high royalty rate, which is one of the higest in the world. As against 15 per cent in India, royalty rate vary from 5.35 per cent to 7.5 percent in Australia, two per cent in Brazil and between 0.5 per cent and 4 per cent in China.
“Moreover, there is no export duty on iron ore in these countries. Hence, the mining for us has been completely unviable,” industry player said.