ABSTRACT
The romantic story of the discovery of diamonds in South Africa is well known. Exploitation of the diamond fields had begun before 1870. In the early 1920's, however, the monopoly of the De Beers Company began to be encroached upon; and before the end of the decade its monopoly had definitely been lost, important new sources of production coming into operation in the Belgian Congo, Brazil, Angola and British Guiana. The Income Tax Act of 1925 further increased the rate of taxation on diamond-mining to 15 per cent, with a lower rate of 10 per cent on payments of debenture interest made by the mines. Let us inquire into the economic effects that a proportional or flat-rate income tax would produce in the South African diamond-mining industry over a long period, during which the industry retained its monopoly of world production.
