Peru: Resistance to Increasing Mining Royalties

[Judi Lynn]

Resistance to Increasing Mining Royalties
By Milagros Salazar

LIMA, Dec 10, 2010 (IPS) - As metal prices continue to soar, the debate on a tax on windfall earnings of mining companies in Peru and an increase in the royalties they pay has been revived. But industry lobbying and the government’s reluctance to make changes with elections just around the corner has hindered approval of two bills that would give the state a greater share of mining revenues.

"Recovering revenue from natural resources is a global debate that is picking up steam," economist Humberto Campodónico told IPS. "In Peru, however, there are only timid attempts, because the political momentum is lacking to bring about a change, which will only be possible with another government."

Countries like Bolivia, Ghana, Mexico and Mozambique tax the windfall earnings of mining companies, and Australia passed a similar tax this year, which will go into force in 2012.

One of President Alan García’s election campaign pledges was to impose a windfall tax on mining companies. But when he took office in 2006, his government negotiated instead "voluntary payments" by the companies during his five-year term, to go towards fighting poverty.

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