Tuesday, May 7, 2013

Big Mining, Small Taxes?

Mining, in all its beauty.

President Santos often calls the mining sector one of Colombia's economic 'locomotives.' But a new report by the contraloria, the government audit office, suggests that the mining industry isn't contributing all that it should for Colombia.

According to the new report, summarized by El Tiempo, the mining industry is using questionable deductions to radically reduce its taxes - 200 pesos in taxes lost for each 100 actually paid. As a result, while mining's official tax rate is 33% of profits, its actual rate is only about 10%.

The report also found contradictions between Colombia's actual gold export numbers and those reported to the government, which were 53 tons less between 2003 and 2011.

Mining, of course, does pump money into the economy in other ways, thru wages and purchase. But it also has a huge deficit, particular from its environmental impacts. For each ton of coal produced, the industry produces ten times as much waste, called tailings. Some of those tailings cover forests and choke rivers. El Espectador reported recently that there are many mining concessions inside of National Parks, apparently in violation of the law.

Mining is already notorious, of course, for its environmental impacts, often dubious respect for environmental laws and its often unhealthy impacts on poor neighboring communities.

And things may get even worse for the environment. In 2010, Colombia approved a new Mining Code to replace the 2001 version. But the next year a court ruled the 2010 code invalid because indigenous communities had not been consulted. At the same time, the court extended the code's validity for two years while a replacement could be developed. But a new code hasn't been created, meaning that as of mid-May the weak, outdated old 2001 code may kick back in.

By Mike Ceaser, of Bogotá Bike Tours

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