The Private Sector has advised government to come up with sustainable mechanisms of collecting Mine taxes if the sector is to continue attracting more investment.
Private Sector Development Association (PSDA) Chairperson Yusuf Dodia says government through the Bank of Zambia should put in place effective measures that are aimed at properly accounting for taxes collected from the mining sector.
Speaking in an interview with ZANIS in Lusaka today, Mr Dodia explained that there is need for the Bank of Zambia (BoZ) to focus on useful bases of collecting mine taxes and contribute to the economic growth of the country.
Mr Dodia said BoZ should work out a regulation plan that will ensure that all copper exports are properly accounted for in a transparent and accountable manner.
He noted that through this process the Zambian government will be able to receive enough money in its commercial Banks which can consequently benefit the whole country.
He noted that this can also go a long way in assisting commercial banks in the country to make funds available for other local businesses not only in the mining sector but also other private sector developmental programmes.
Mr Dodia pointed out that there is also need for government to ensure that mine companies declare their assets and confirm correct figures of their earnings to Zambia Revenue Authority (ZRA).
He explained that there is no need to revise the mine taxes when ever there is an improvement in the prices of metal on international markets adding that the action is likely to affect investor growth.
He stated that this is why government should come up with a long term plan of collecting revenue from mine companies that will not affect their growth but will rather encourage the development of the sector there by attracting more investors.
The PSDA Chairperson further added that mine investment is a renewable resource therefore government should aim at maximizing the taxes collected through a long term measure.
Mr. Dodia was reacting to growing concerns that government should consider revising mining rates following rise in copper prices on the international market to about $6, 47 US dollars per tonne.
ZANIS
It was less than 6 months ago that this Govt was being advised against revising the mine taxes. It did not make sense reversing the windfall tax. Musokotwane should resign
Its not just the matter of attracting investors who will go away with our mineral resources with adding any value to our country. If we have no ways of benefiting from our mineral resources, let us leave the minerals untapped so that our off springs might be wise enough to make use of these resources to the benefit of this country. Miners who are digging and processing these minerals are getting peanuts , now who is benefiting?
Musokotwane is a failure,he was advised against revising the windfall tax but he arrogantly went ahead to please his inept boss
It clearly explains why our country is so poor and yet very rich. Becouse people in charge are busy doing nothing but stealing from the little thats collected. Does the word “Accountability ” even exist in GRZ officials brains honestly
One wonders if most African leaders have a Conscience . How can you be proud of being president of a nation so poor because you have failed to responsibly account and manage it. You are even proudly touring the world with your shapeless heard high.
Zambia needs revenue therefore windfall tax policy needs to be brought back. I look at this in a particular scenario …. Why do people who own shops not give items for free for each person who walks in their shop….. ? Well, in the long term they will become bankrupt every accountant knows that. If Z keeps giving it’s resources away for peanuts in the name of foreign investment it will have no resources left. As long as there are people starving, education system to be paid for , roads to be repaired etc Zambia needs to get revenue from each investor. If noone wants to invest and pay tax leave it for the younger generation to sort out maybe they will have a better plan and at least the resources will still be available for them. Zambia can switch to agriculture if mining ain’t…
There are three issues you all need to understand first.. (1) without Copper exports, Zambia will not have the forex it needs to sustain life as we know it. We wont have forex to buy fuel, imported beer, cooking oil, etc.. Therefore, to keep our resource burried without exploiting it is tantamount to going back to the village. (2) Zambia and Zambians do not have the required technology and funds to keep the mines running profitably forever. We tried this in 1970 when we nationalized the mines and we failed to recapitalize them. Instead, we pumped money into socialist projects and big cars whilst the mines ran down. (3) the mining investor does not invest in Zambia because he likes us. He is driven by profit. If you make mining unprofitable, investors will pull out, like Anglo did in 2002.
These mining companies borrow from foreign banks and have a solid reputation of paying back. They forecast copper prices and budget based on these forecasts. The lenders trust that during high prices of the commodity, the mining firm will make more money and keep it so as to cover times when the commodity price slumps. If we choose to reap when copper prices are high, then we should be ready to bail out the mining company when it fails to meet its target when prices slump, even if we have to borrow in the name of Zambians from the IMF/World Bank to finance these giants. But as you know, Zambia does not have capacity to bail out the mines. So what are we goingto do? I suggest we use our forex wisely and desist from buying booze, cars, etc… and pump the money into industry!
If we can develop a powerful industrial base, like UNIP had planned for us in their 27 year rule, we will no longer be dependent on copper exports and we will have created wealth amongst Zambians. By so doing, we can generate tax from our own industries to fund government projects and complement the tax we earn from mining companies. Furthermore, the more Zambians are employed, the less tax is required to finance their livlihoods because they will be financing themselves. Govt will only be responsible for building infrastructure and developing human resource capacity. Right now our government has to feed people, clothe people, give free education, free health care, free roads, etc… all on tax from 200,000 formally employed citizens and mine taxes to cater for the needs 12 million people!
#9 thanks for the information very educating and I need more answers..I am not an economist but I thought the windfall tax was performance based therefore the credit crunch etc did not affect the industry and if they did not produce anything they did not have to pay & it did not affect their profit. Levy policy was good as this was a long term safety net to give the Zambian revenue “when investors did well we also enjoyed the profit and shared in their loss when they didn’t. I think it is a fair tax system. What is puzzling If it was accepted by the previous investors when Levy implemented the windfall tax why did the investors suddenly change their mind to stop paying it?? This little revenue can be used to develop other sectors in Z. Please help me understand
I fully agree with Dodia on the mining tax that government should find a lasting solution unlike changing goal posts when the price of copper go burst. Zambia learn copper mining countries like Chile who have had windfall tax for sometime now whereby even if the copper price go burst, the taxing system takes care of the tax to be paid and vice versa to the benefit of the country.
It’s unfortunate for Zambia to have completely abolished the windfall tax introduced by the late president. IMF before 2009 budget advised government not to abandone the windfall tax as we needed funds to improve our infrastructure in education, health, roads, etc. Like others have said, Musokotwane, Finance Minister has failed me and Zambia. These are our resources and we need to benefit from them.