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Thursday, 4 August 2011

The Mongolian Model

It appears the Alaskan model for mineral revenue sharing also has a home in Mongolia :
Mongolian policy makers have created a “human development fund” in large part through prepaid taxes from foreign investors in the Oyu Tolgoi mine, and it doles out 21,000 tugriks ($17) to every Mongolian once a month. Government negotiators are also demanding that the foreign companies that will develop the Tavan Tolgoi mine, which holds an estimated 6.4 billion metric tons of coal, pay their taxes early. Plans call for listing shares of the project in London or Hong Kong, then granting 10 percent of them to the Mongolian people, making every citizen a shareholder.
From a fascinating article - Foreign Money Invades Mongolia. As we have previously noted, a precondition for these innovative models is that you actually have money. Zambia at present cannot afford $17 monthly payments per person for its mineral wealth because that would demand it collects atleast $2.7bn per year in mineral royalty taxes. As we have noted, it only collected $52m in 2009 from an industry making over $5bn that year. We touch on these issues in our latest essay - Debunking the Government's Case for Low Mining Taxation in Zambia

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