FREETOWN Aug 13 Sierra Leone plans to cut taxes
on gold produced by small, individual miners nearly in half to
reduce smuggling and boost exports, a year after the West
African state did the same for diamonds, a top mining official
told Reuters on Monday.
The move would undo part of a mining law drawn up in 2009
and backed by the International Monetary Fund. The law was meant
to increase government revenue in the war-scarred country but
instead backfired by triggering a slide in official exports.
"We have already suggested it, and we are working on it,"
Jonathan Sharkah, director of mines, said of the plan to reduce
taxes. "Maybe the next two months, three months we will do it."
The proposed cut would bring export taxes on individually
mined gold down to 3 percent from the current 5 percent, he
said. The move would follow a cut on individually mined diamonds
to 3 percent in March 2011 from the previous 6.5 percent.
Sierra Leone, struggling to rebuild from a civil war that
ended a decade ago, depends heavily on minerals exports to fill
state coffers, with diamonds traditionally the country's top
Its gold sector, which has attracted the interest of
industrial miner Cluff Gold, is relatively small.
Official exports totalled nearly $9 million worth of the
precious metal in 2010, all of it from small individual
Taxes on industrial gold exports, which have yet to begin,
are expected to remain at 5 percent.
Sharkah said the efforts to reduce export taxes on small
miners followed a dramatic slump in official exports - probably
due to smuggling - after the tax hikes went into effect in
According to documents provided to Reuters by Sierra Leone's
Government Gold and Diamond Office (GGDO), Sierra Leone's
diamond exports dropped in half to 18,609 carats in December
"We tried for the diamonds and it didn't work. We had to go
back to 3 percent," Sharkah explained, adding that exporters
hoarded gems during the brief period the duty was higher.
According to GGDO documents, total gold exports for 2010
were 270,265.03 grams and slumped to a total of 167,150.42 grams
"With artisanal miners all over the bushes, we just cannot
control them, they can smuggle," Jonathan Sharkah said.
Sierra Leone, which is headed to the polls for a
presidential election in November, late last year began
commercial exports of iron ore, which has overtaken diamonds as
its top revenue earner.