Identifier
Created
Classification
Origin
07LAPAZ183
2007-01-24 16:22:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy La Paz
Cable title:
MINING MINISTER SAYS GOB WILL RAISE TAXES
how-toVZCZCXYZ0002 RR RUEHWEB DE RUEHLP #0183 0241622 ZNR UUUUU ZZH R 241622Z JAN 07 FM AMEMBASSY LA PAZ TO RUEHC/SECSTATE WASHDC 2220 INFO RUEHAC/AMEMBASSY ASUNCION 6488 RUEHBO/AMEMBASSY BOGOTA 3810 RUEHBR/AMEMBASSY BRASILIA 7690 RUEHBU/AMEMBASSY BUENOS AIRES 4936 RUEHCV/AMEMBASSY CARACAS 2179 RUEHPE/AMEMBASSY LIMA 2268 RUEHMD/AMEMBASSY MADRID 3282 RUEHMN/AMEMBASSY MONTEVIDEO 4367 RUEHNE/AMEMBASSY NEW DELHI 0100 RUEHQT/AMEMBASSY QUITO 4819 RUEHSG/AMEMBASSY SANTIAGO 9410 RUEHKO/AMEMBASSY TOKYO 0280 RUEHUB/USINT HAVANA 0107 RHMFIUU/HQ USSOUTHCOM MIAMI FL RUMIAAA/USCINCSO MIAMI FL RUCPDOC/DEPT OF COMMERCE WASHINGTON DC RUEATRS/DEPT OF TREASURY WASHINGTON DC RUEHC/DEPT OF INTERIOR WASHINGTON DC RHEHNSC/NSC WASHINGTON DC
UNCLAS LA PAZ 000183
SIPDIS
SENSITIVE
SIPDIS
STATE FOR WHA/AND LPETRONI
COMMERCE FOR JANGLIN
TREASURY FOR SGOOCH
E.O. 12958: N/A
TAGS: EMIN EINV ECON PREL PGOV BL
SUBJECT: MINING MINISTER SAYS GOB WILL RAISE TAXES
REF: LA PAZ 137
-------
SUMMARY
-------
UNCLAS LA PAZ 000183
SIPDIS
SENSITIVE
SIPDIS
STATE FOR WHA/AND LPETRONI
COMMERCE FOR JANGLIN
TREASURY FOR SGOOCH
E.O. 12958: N/A
TAGS: EMIN EINV ECON PREL PGOV BL
SUBJECT: MINING MINISTER SAYS GOB WILL RAISE TAXES
REF: LA PAZ 137
--------------
SUMMARY
--------------
1. (SBU) Bolivia's mining minister told the Charge January 23
that the GOB would raise mining taxes, reiterating proposals
presented to U.S. and other foreign firms and asserting the
government's right to take a greater share of companies'
income. The Charge reminded the minister of firms' need to
earn acceptable investment returns and urged him to carefully
consider the negative impact of proposed tax hikes on
companies' financial positions; the minister responded by
saying he believed the GOB had prepared an "objective"
proposal and had "mostly" reached agreement with the
industry's major players. End summary.
--------------
MINISTER SAYS THE GOB WILL RAISE TAXES
--------------
2. (SBU) In a January 23 meeting with the Charge, Bolivian
Minister of Mining Jose Dalence confirmed GOB plans to raise
mining taxes, reiterating proposals presented to U.S. and
other foreign firms earlier this month (reftel). Dalence
confirmed that the government wants to eliminate companies'
ability to credit the complementary mining tax (CMT) against
income taxes; abolish the tax rate cap on the existing
sliding scale; and raise taxes at each mineral price. He
also asserted the government's right to take a greater share
of companies' income, arguing that GOB revenues should rise
in tandem with mineral prices.
3. (SBU) The Charge reminded Dalence of firms' need to earn
acceptable investment returns and urged him to carefully
consider the negative impact of proposed tax hikes on
companies' financial positions, pointing out that U.S.-based
Apex Silver and Coeur d'Alene could be forced to cancel or
halt significant projects. The minister responded by saying
he understood that companies "existed to earn money" and
played a crucial role in Bolivia's mining industry. He added
that he believed the GOB had prepared an "objective" tax
proposal and had "mostly" reached agreement with the
industry's major players.
--------------
COMMENT
--------------
4. (SBU) Dalence tailored many of his comments to his
audience, assuring the Charge that the GOB recognizes the
importance of foreign investment and has no desire to see
companies leave. The minister made it clear, however, that
the GOB has no intention of backing away from proposed tax
hikes. Company representatives may characterize as "liberal"
the minister's statement that the two sides are "mostly" in
agreement, but it seems increasingly clear that GOB
determination will eventually force a resolution -- although
not necessarily one companies will like. End comment.
URS
SIPDIS
SENSITIVE
SIPDIS
STATE FOR WHA/AND LPETRONI
COMMERCE FOR JANGLIN
TREASURY FOR SGOOCH
E.O. 12958: N/A
TAGS: EMIN EINV ECON PREL PGOV BL
SUBJECT: MINING MINISTER SAYS GOB WILL RAISE TAXES
REF: LA PAZ 137
--------------
SUMMARY
--------------
1. (SBU) Bolivia's mining minister told the Charge January 23
that the GOB would raise mining taxes, reiterating proposals
presented to U.S. and other foreign firms and asserting the
government's right to take a greater share of companies'
income. The Charge reminded the minister of firms' need to
earn acceptable investment returns and urged him to carefully
consider the negative impact of proposed tax hikes on
companies' financial positions; the minister responded by
saying he believed the GOB had prepared an "objective"
proposal and had "mostly" reached agreement with the
industry's major players. End summary.
--------------
MINISTER SAYS THE GOB WILL RAISE TAXES
--------------
2. (SBU) In a January 23 meeting with the Charge, Bolivian
Minister of Mining Jose Dalence confirmed GOB plans to raise
mining taxes, reiterating proposals presented to U.S. and
other foreign firms earlier this month (reftel). Dalence
confirmed that the government wants to eliminate companies'
ability to credit the complementary mining tax (CMT) against
income taxes; abolish the tax rate cap on the existing
sliding scale; and raise taxes at each mineral price. He
also asserted the government's right to take a greater share
of companies' income, arguing that GOB revenues should rise
in tandem with mineral prices.
3. (SBU) The Charge reminded Dalence of firms' need to earn
acceptable investment returns and urged him to carefully
consider the negative impact of proposed tax hikes on
companies' financial positions, pointing out that U.S.-based
Apex Silver and Coeur d'Alene could be forced to cancel or
halt significant projects. The minister responded by saying
he understood that companies "existed to earn money" and
played a crucial role in Bolivia's mining industry. He added
that he believed the GOB had prepared an "objective" tax
proposal and had "mostly" reached agreement with the
industry's major players.
--------------
COMMENT
--------------
4. (SBU) Dalence tailored many of his comments to his
audience, assuring the Charge that the GOB recognizes the
importance of foreign investment and has no desire to see
companies leave. The minister made it clear, however, that
the GOB has no intention of backing away from proposed tax
hikes. Company representatives may characterize as "liberal"
the minister's statement that the two sides are "mostly" in
agreement, but it seems increasingly clear that GOB
determination will eventually force a resolution -- although
not necessarily one companies will like. End comment.
URS