BUSINESS NEWS
Team to assess fuel windfall tax
Posted Wed, 12 Apr 2006
Finance Minister Trevor Manuel has appointed a task team to
investigate a possible tax on windfall profits in the country's
fuel energy sector, the National Treasury said on Tuesday.
The team will advise Manuel on possible reforms to the tax
system.
In a statement, the Treasury said the synthetic fuel industry in
South Africa accounted for between 35 and 40 percent of domestic
petroleum sales.
Local producers sold their products into a market governed by
the international selling price of crude oil.
"Concerns exist that this dispensation benefits synthetic fuel
producers and their shareholders disproportionately, at the expense
of the consumer and the taxpayer," the Treasury said.
"Internationally, oil and gas companies are often subject to
fiscal regimes that effectively taxes the windfall profits
associated with high crude oil prices relative to resource
extraction costs."
The Treasury said the long-term development of the domestic fuel
industry, the design of an appropriate taxing system and the
development of relevant environmental and industrial regulatory
arrangements had to be carefully considered.
Some of the aspects the task team would investigate included the
options to ensure that the synthetic fuel industry contributes
optimally to development in the country. This would be assessed
against several factors, like its significance for the economy, the
impact of the oil price and exchange rates on synthetic fuel
producers' profitability and the potential for further expansion in
the industry.
The task team will consist of five people and will be chaired by
Zavareh Rustomjee, a former director-general of the trade and
industry department.
The team has been asked to prepare a discussion paper for
comment by the end of July and to complete its work by September
15. It is expected to meet for the first time in May.
Sapa
| 
