FINANCE minister Dr Situmbeko Musokotwane
FINANCE minister Dr Situmbeko Musokotwane

Finance and national planning Minister Situmbeko Musokotwane has maintained that government will not re-introduce the windfall tax.

Dr Musokotwane explaine that it is not possible to re-introduce the windfall tax on the mines as it is unreasonable.

Following the announcement of the budget last Friday, stakeholders have questioned governments silence on windfall tax.

But the finance Minister said that Zambians should not mislead themselves that there is no any other tax from the mines.

He observed that most people think that without the windfall tax, Zambia is not receiving any other tax from the mines.

Featuring on national television this afternoon, Dr Musokotwane stated that Zambia’s windfall tax was too high and unreasonable.

He said that if Zambia introduces the windfall tax, it is likely to discourage investments in the mining sector in the end collapse it.

And Dr Musokotwane has clarified that the government has not forgotten about the youth in the country.

He said that despite the government allocating 10 billion kwacha to the youth, they are still considered in other programmes.
[ QFM ]

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40 COMMENTS

  1. Interestingly enough, Mongolia also repealed their windfall taxes on mining companies. Their mining industry was not growing and investment was not flowing in. To encourage more investment in, they repealed their windfall taxes on mining companies.

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  2. Musokotwane claims that the re-introduction of windfall tax on mines will discourage investment.Hang on! this mine tax was abolished on Friday 27th March 2009, does this mean that we never had investors running these mines?

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  3. #1
    Point of correction,Mongolia REPEALED their windfall tax regime,they did not scrap it.The Mongolian Gvnt was taxing the mines 68% on all copper and Gold sales above a certain threshold, on the other hand was charging a mere 37%, more over the Mongolian Gvnt will still maintain a 34% stake in all the mines, which also works in favour of the Mongolians,now compare that to the Zambian situation
    Go to Rio Tinto Website, you will find this information,because Rio Tinto complained about this tax and they eventually negotiated to reduce it not abolish it.What stake has the Zambian Gvt in any mining venture?

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  4. RED CARD-Smoothcriminal you too dull to understand matters of taxation and Zambian concept.

    Say you what?

    Investors fleeing Australia due to mining tax: Fortescue

    (Reuters) – International investors are fleeing Australia’s resource sector as a result of the government’s decision to impose a new 40 percent mining tax, a top mining executive has said.

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  5. “Now we don’t have that ability to invest … quite simply those revenues needed to support future projects are gone.”

    Analysts say Fortescue Metals Group has been among the hardest hit by the government’s decision earlier this month to introduce the new Resource Super Profits Tax.

    The new tax is set to raise about A$12 billion ($11 billion) in its first two years and is due to be implemented from July 2012. Since it was

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  6. Since it was announced a series of mining companies, including Fortescue, have suspended major investment projects.

    Forrest said the structure of the new tax meant miners had to pay the tax before they paid off interest and pay back capital to bankers, making it impossible to raise finance for new projects. He compared the situation to applying for a mortgage.

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  7. Bankers had pulled out of some planned Fortescue projects, he said, including the $9 billion Solomon Hub project in Western Australia state, to create a 160 million metric tones a year iron ore mine.

    China is a key customer for Australia’s resources, particularly iron ore, and Forrest said a note from a Chinese consulate had made clear that the tax had undermined Australia’s competitive advantage.

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  8. “(It) said, Australia’s competitive advantage to China, over Brazil, over India, over these massive competitors Australia competes against, that competitive advantage we did have is now gone,” Forrest said.

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  9. Mwata
    That is the same super tax(and NOT windfall tax) that brought Kevin Rudd’s govt down as acknowledged by his then deputy,the current PM Julia Gillard.Now Rudd is just a Foreign Secretary cos of misplaced tax policies.Well said Dr.Keep it up.

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  10. Zambia Sell First Bonds as Africa Lures Yield-Seeking Investors

    Nigeria and Zambia are among African nations turning to global capital markets for the first time as falling yields and better economic management enable them to raise the funds needed to sustain growth.

    Nigeria appointed Barclays Capital this month as an adviser for its planned $500 million Eurobond, while Zambia says it will raise $1 billion once it gets a sovereign credit rating this year. Kenya, Tanzania and Angola are considering similar issues, while Sudan will sell $300 million of Islamic bonds next year.

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  11. Africa is tapping markets abroad as investment from China and India and its own burgeoning consumer spending fuel economic growth in excess of 5 percent a year. That is adding to strains on obsolete road and rail networks, while increasing power shortages on a continent of 1 billion people that has electricity capacity equivalent to Spain’s. With yields near zero in Europe, the U.S. and Japan, investors are looking to markets they previously shunned.

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  12. “The timing is perfect,” said Samir Gadio, an emerging- markets strategist in London at Standard Bank Group Ltd., Africa’s biggest lender. “Global yields are extremely low and that’s pushed a lot of countries to tap international markets. We’ll see good demand for these bonds. There’s just so much excess liquidity across the globe.”

    Only seven sub-Saharan African countries — South Africa, Seychelles, Senegal, Ivory Coast, Gabon, Republic of Congo and Ghana — have sovereign bonds. All of them, aside from South Africa, have entered the market since 2007.

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  13. Mwebanthu Sata will expedient his self announced asylum itinerary to Taiwan other wise he will kill himself in the run up to 2011.

    Fundamentals

    Some economic fundamentals have improved in Ghana, Zambia, Nigeria, Tanzania and Uganda.

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  14. Mwata
    Just 1 question sir! educate me,,,which mine company has closed their operations in Australia die to the Supertax. its a bit too rich for you to call me dull and you will claim to be smart after copying and pasting crap

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  15. Mwata and Sharp Shooter. The Australian govt did not do away with the Super Tax or Windfall Tax (whatever you prefer). Rudd proposed a Super Tax of 40%. They were usual complaints from the mining companies. Rudd never budged! Unfortunately there was internal strife within the ruling Labour Party not over resource taxes but over the Climate Change bill! Julia Gillard took over the reigns. Before she called for elections she convinced the mines to pay up the Super tax. The only thing she did was to reduce it to 30% from 40%. This is NOW Australian Resource LAW. On top of this Mining companies in Australia also pay royalties of 8.5%. In Zambia Royalties are pegged at 3%. A ZAMBIAN proposed windfall tax of 25% was SCRAPPED because the mining companies COMPLAINED! REDUCED =AUSTRALIA!

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  16. @ #3 Redcard Smooth Criminal

    Definition of “repeal”, cancel officially, an official or legal cancellation, A repeal is the removal or reversal of a law

    The Mongolian govt does maintain 34% stake in the mining companies. They did however “repeal” the windfall taxes on mining companies to encourage more investment.

    Concerning your [Quote] “What stake has the Zambian Gvt in any mining venture?”[End Quote], well ZCCM-IH Owns 4.4% in Equinox, 15% in LCM, 10% in MCM, 10% in Chambishi Metals, 20.6% in Kansashi, 100% in Ndola Lime, 15% in NFC and 15% in CMP to my knoweldge.

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  17. @ #3 Redcard Smooth Criminal

    Definition of “repeal”, cancel officially, an official or legal cancellation, A repeal is the removal or reversal of a law

    The Mongolian govt does maintain 34% stake in the mining companies. They did however “repeal” the windfall taxes on mining companies to encourage more investment.

    Concerning your [Quote] “What stake has the Zambian Gvt in any mining venture?”[End Quote], well ZCCM-IH Owns 4.4% in Equinox, 15% in LCM, 10% in MCM, 10% in Chambishi Metals, 20.6% in Kansashi, 100% in Ndola Lime, 15% in NFC and 15% in CMP to my knowledge.

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  18. #16 Barotse Princess
    Be reminded that the proposed supertax will be due in july 2012.The Climate Change bill was indeed one of the reasons but the major fallout in the Labour party was according to Gillard.’the way in which they had “introduced the debate” about the Resource Super Profits Tax’.If that isnt enough,the ad war as continued against the govt and the Mining interests are set to re-introduce ads arguing against the proposed revised changes during the 2010 federal election campaign.

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  19. Im putting it to you that Mongolia did not abolish,they reduced it from 68% to 37% with a holding of 34% stake in each mining venture.Compare the figures you have given to 34% if zambia negotiated well with the major players like;
    Mopani Copper Mines plc ,Chambishi Metals plc ,Konkola Copper Mines plc ,NFC Africa Mining plc ,Kansanshi Mining Plc ,Luanshya Copper Mines plc ,Equinox Minerals Ltd (Lumwana Copper Project) ,Chibuluma Mines plc ,Copperbelt Energy Corporation
    What you people like the minister fail to explain is exactly what manner of tax or levy and at what rate these mines are being charged;if there was a meaningful tax regime,we wouldnt have been getting loans for mobile hospitals

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  20. # 20 Good point. Can someone explain to us the current tax structure on the mines. And stop comparisons with other countries with different economies.

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  21. @ #20 Red Card Smoothcriminal

    All the news agencies including Reuters stated that Mongolia repealed their windfall taxes. I have also given you the definition of repeal. I am simply giving you what credible news sources like Reuters have reported. They said repeal. You also said repeal in your post on #3 and I quote, “Point of correction,Mongolia REPEALED their windfall tax regime” [END QUOTE].

    The mines are still being charged variable profits taxes as well as an increase in mineral royalties from 0.6% they were paying to 3%.

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  22. No Windfall Tax has not been scrapped. It is being paid to individuals at 1% which is a lot of US$ if it is going into a private account.

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  23. #19 Sharp Shooter: Thanks for your explanation! So the major fallout was the ‘way they introduced the debate’! This my dear should tell you that Gillard was not opposed to the super tax in principle. She only had misgivings about the way the debate was introduced. Of course the new Super Tax law of 30% will be effective from 2012. The point is the Australians did not cow in the face of opposition from the mining companies. They stood firm and only reduced the tax from 40% to 30%. The Zambian govt chicken out and scrapped the whole thing. It is very stu/pid of a govt to get $77m from a sector that generated a Turnover of $3bn in 2009. This is criminal. Corporations around the world dont like paying taxes. It is up to govts to be tough! Tell them to pay or they can go and mine elsewhere!

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  24. #24Emmanuel
    Iam very much against the taxing of turnover cos it includes productions costs.However if mines declare super profits from turnover,I have no problem govt introducing reasonable super tax on the super profits.

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  25. Whatever the case for windfall tax,the opoint is that Zambians still feel that they are not benefiting from their birth rights,All countries around the world have developed by ensuring that they are the ones benefiting from birth rights like cooper in the case of Zambia.If tax is a hard thing to do by our governments,the other solution is government acqiring some of the shares in these mines on behalf of the Zambian pipo.Another important reminder to our government is that in this 21st centuries there is need to start behalving as mature pipo or simply show signs of maturity that one day we will be able to command our resources and the world will have to dance to our tune in terns of prices.This is possible and Africa and Zambia particularly has changed greatly in this respect.

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  26. #25 Sharp Shooter’ You should know by now that where natural resources are concerned the practice all over the world is first to tax turnover by way of a percentage of ROYALTIES ! So your argument is redundant because Royalty Taxes have nothing to do with production costs or profits. As long as a company has dug out any amount of ore from the ground the govt will have to levy the royalty tax at the market value of the mineral. Profit or loss is not an issue here! Honestly sometimes I wonder whose interest people like represent.

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  27. #25 Sharp Shooter
    #24 Emmanuel
    No sane Government would tax a company on Turnover.It defeats the basic rule of taxation.In taxation we have allowable and disallowable expenses.All costs pertaining to production are allowable i.e deducted from turnover for taxation purposes.
    A taxable income is actually the profit made.
    A windfall/super tax comes into effect when the product e.g copper reaches a determined threshold(price on the LME-london metal exchange),e.g GRZ puts $7,000 as a threshold.
    If KCM sells its copper to china at $7,000 then the windfall/super tax comes into effect.

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  28. As you are debating this topic, don’t forget where everything started from. ZCCM was on its knees, prices of copper were at rock bottom, and so the mining industry was given away for a song, so they say. Some of the major players in the ZCCM privatization decisions were Mr Sata and other people now in the opposition. They mooted the obnoxious Development Agreements. Even now with all his flip flopping, Mr Sata recently called for reintroduction of those DAs. Now every one knows that to restore the DAs, Mineral Royalty tax will fall back to 0.6% and windfall tax will not be introduced. And yet the same opposition supporters conveniently look the other way. Makes one wonder whether indeed we are all genuinely fighting for the interests Zambia, or for the interests of our Mr Sata and his…

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  29. Minister Situmbeko Musokotwane is bought and paid for by the mines. He does not serve the people of Zambia, but foreign mining interests. He is corrupt, and a disgrace to the country and his people.

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  30. And when I say dr. Musokotwane’s people, I mean the Zambian people, just so there is no confusion.

    How about a taxpayers revolt. Why would anyone pay a single cent of taxes to this or any government, when it refuses to tax the mines for all of it’s needs?

    To only tax those who are in employment, or to seek to expand taxation to the informal sector is cowardice.

    I wonder how the people who are now saying that it is ‘madness’ to tax the mines based on revenues, intend to tax the informal sector. On income statements? Or are they going to say – you probably make $1,- per day, give us $0,25 per day?

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  31. The mines have to be tax heavily for Zambia to develop. I have never felt stronger about this than after listening to the excuses made by these ministers on why the mines should not be taxed.

    On top of that, minister Musokotwane has admitted that following this ‘development’ model, poverty will not be reduced for 30 years.

    So what is the point of free trade? It is to free the way for foreign corporations and create a permanent political elite that will be allowed to use the donor funds.

    This is the neocolonial model. Exploit Africa’s resources for free, while ensuring that a completely disposable local elite keeps things running.

    This is not democracy.

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  32. Can we put irrelevancies to one side and focus on what is pertinent to our situation as a young developing country. Mining is fundamentally different and therefore can not be compared like for like. Raw materials are finite and we have to ‘make hay while the sun shines’. If we lose this opportunity to benefit from mining gains posterity will never forgive us. Countries go through different developmental stages and our stage can be likened to Europes industrial revolution. But there has to be a revolution in the sense of changing how things are done on a large scale.

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  33. So nevermore windfall taxes

    And in the same time mines crook Zambian state…

    2 simple examples

    i) govt (zccm-ih) owns 20% Kansanshi mining

    Kansanshi Mining owes ZCCM-ih $ 358 million while the benefit of kansanshi overtook $ 664.2 m in 2008 and $610.4 m in 2009 ! and kansanshi only gave crumbs ($24 m)

    ZCCM-ih has no money but owes the govt $ 300million

    the govt owes IMF $ 333 million and was only able to pay back $ 1,9 million…

    ii) govt (zccm-ih) owns 10% MCM (Mopani)

    that zambia’s major copper mines whose accounts are opaque, does not actually belong to Glencore and FQM but to their subsidiaries (Carlisa Investments & Skyblue Enterprise) based in tax havens and off-shore centers (British Virgin Islands )

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  34. continued

    Mopani uses transfer pricing and thus never paid taxes to govt and gave none dividends to zccm

    To resume

    No windfall taxes
    Low mineral tax
    Tax evasion
    Few jobs for Zambian slaves
    Crumbs given to zccm-ih
    Several billion dollars for mines every year

    Musokotwane is a liar and a crook

    As MrK said, finance Minister is bought and paid for by the mines…

    empty mouth and pockets for many people
    full mouth and full pockets for rupiah and his cronies !

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  35. Hi MikeTe,

    Great to see your contribution here – you bring the facts about ZCCM-IH. There are so many grounds for bringing ZCCM-IH to court. Perhaps it should belabeled a criminal organisation. They have embezzled enough funds and kept millions from being distributed to their shareholders.

    At least, the model has failed.

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  36. Iwe, I thing only 30% of Zambia understand the budget and only 15% cares because those are the private employer. Guys lets be real in Zed><<

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  37. Hi MrK

    I am very busy, but I would always spend time on denouncing these crooks and his gang leader

    The Board and management of zccm toe the line…

    100 million dollars swindled from ZCCM

    the gvt, finance minister Musokotwane ALSO FORMER DIRECTOR OF ZCCM know that and where the money is…
    if mauritian banks refuse to return money why Musokotwane does not publicly make pression on mauritians ??

    Today where is the money???

    And that crook needs to borrow money to make ends meet

    Moreover zccm has never published audited statements in 4 years…
    So what does Musokotwane want to hush up??

    I hope HH and sata are mature and responsible enough to allow zambian people to destroy this corrupted regime….

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  38. ” Dr Musokotwane explaine that it is not possible to re-introduce the windfall tax on the mines as it is unreasonable. ”

    Unlike loading up the government with billions of dollars in eurobond debt?

    ” He said that if Zambia introduces the windfall tax, it is likely to discourage investments in the mining sector in the end collapse it. ”

    Like what is happening today anyway? Thanks to neoliberal deflation worldwide.

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