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Pretoria ditches biofuels windfall tax plan



By Upstream staff 

South Africa will not impose a windfall tax on synthetic fuel producers such as Sasol and PetroSA, the National Treasury said today.

"(The) government has also decided not to proceed with a tax on the windfall profits earned by existing synthetic fuel producers in the interest of a conducive environment for additional investments in domestic fuel security," Reuters quoted the National Treasury as saying in a statement.

A government taskforce proposed a possible tax on windfall profits and an incentive arrangement for new investment in liquifuel production capacity.

Finance Minister Trevor Manuel, who said in February he would consult the oil industry on the proposed windfall tax, told reporters in Pretoria that the government wanted to be fair.

"We want to be fair, we want to avoid (a) retrogressive tax law," Manuel said.

The taskforce had proposed that a further tax on existing synthetic fuel production volumes would kick in from a level for international oil prices of about $45 to $55 per barrel of crude.

The team also recommended a progressive incentive scheme for investments in new synthetic fuel and biofuel plants, including tax credits at low oil prices and tax at high prices.


Monday, 06 August, 2007, 11:26 GMT  | last updated: Monday, 06 August, 2007, 11:26 GMT

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