Sunday, March 3, 2024

High mining taxes unrealistic – State

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Finance Minister Situmbeko Musokotwane

The Government has maintained that pressure to force it to impose higher taxes on mining companies is unrealistic because the Zambian law on taxation is a replica of the laws in developed countries such as Canada and Australia.

Finance and National Planning Minister Situmbeko Musokotwane has also maintained that the Government’s decision to privatise the mining companies is irreversible because the current poverty levels and under-development in the mining hubs had resulted from the mistakes made in the 1970s when the mining companies were nationalised.

Speaking during a recording of the British Broadcasting Corporation (BBC) television debate at Mulungushi International Conference Centre in Lusaka yesterday, Dr Musokotwane said African countries were encouraged to nationalise for them to become rich but the opposite was true.

He said the mining companies had matured and were able to pay more taxes that had helped the Government raise more money for various development projects.

He said the windfall tax being agitated for would make Zambia less attractive to foreign investors and lead to massive job losses.

Apart from Dr Musokotwane, the debate featured former British secretary of state for international development, Claire Short, Andrew de Simeone from the Brazilian mining giant Vale, and Mopani Copper Mines chief executive officer Emmanuel Mutati, and was moderated by BBC broadcaster Tihabi Redi.

Ms Short said Africa’s wealth had become a curse instead of it being a tool for poverty reduction, but Dr Musokotwane opposed the view and said minerals had done a lot for Zambia by creating jobs while the money from taxes was being used for poverty reduction.

He said the value of mining declined because of the poor management of the companies, especially when they were nationalised, but that the fortunes had changed drastically.

Dr Musokotwane said the law guiding the mining systems in Zambia was similar to the one obtaining in countries like Canada, Australia, and South Africa and that it was wrong to demand that Zambia should have a special tax that was not applying to other mineral-producing countries.

[ Times of Zambia ]

30 COMMENTS

  1. Musokotwane, please try to make sense sometimes. Don’t just roll your tongue in your mouth for the heck of it.

  2. What fortunes have changed when ZRA has no capacity to audit these mining firms on their declarations and they are stealing more than they are paying us. Mopani has Mutati as CEO brother to Felix Mutati. Musokotwane, stop telling lies. High taxes will not deter mining firms to come to Zambia for as long as these people know they will still make money. The only attraction why Zambia is seeing the little growth is that rampant corruption which leaves the firms with so many loopholes to explore and evade paying the “real” tax.

  3. Has this guy Musokotwane ever worked for a serious company? His thinking is so weired? This guy is paid by tax payers —– and yet is so unpartriotic, dull and he seem to have an inferiority complex . Instead of standing for Zambia, he always supports foreigners. Even a 4th grader in Zambian knows that the Zambian tax regime is flawed agianst Zambia. What Musokotwane does not understand— is that the same foreigners he has favoured just look at him as dull guy who lucks common sense. How can a finance Minister compare Zambia`s mining to that of Canada & Australia (apples to oranges). This guy just makes sick!!! That is the problem with people who have spent their entire life teaching, no common sense.

    • This man has been compromised in the same manner George Kunda has. We are paying the price of voting into money hungry politicians

  4. If higher taxes scared off investors, then Zimbabwe’s mining industry should have collapsed during Mugabe’s land reform programme. De Beers, Zimplats, Rio Tinto, Anglo Gold etc all stayed in Zim despite the draconian laws. Worse still these foreign firms have been asked to sell 51% of their equity to local Zimbabweans but still they have not left Zimbabwe why can’t we do the same in Zambian. Tax is not an issue provided these companies know they will still make huge profits. So this talk of higher taxes scaring off foreign investors in Zed is a Fcuking lie Musokotwane.

  5. oh please….we have private companies that have the capacity to audit these mining firms. Grant Thornton is one of them so the whole “ZRA has no capacity” argument is hogwash.

    What Dr. Musokotwane is saying is true. Arbitrary changes in tax policy would lead to an unstable investment environment. This would scare away investment. We must not place high priority on short term achievements over long term goals. Long terms goals will benefit the nation better.

    • Mr Capitalist…Why would you entrust Grant Thornton to do audit for you?? Shouldn’t you be building your own capacity within your revenue authority to do this??? What are you giving third parties private jobs. You can’t allow this to continue at long term goals. Wake up there is money to be made by foreign investors whether taxes are high or not. For as long as Zambia has raw materials people will come. Anglo-American regrets having pulled out of Zambia because they know there is money. What surprises me about the whole developmental agenda in zambia is that we seem to convince ourselves that we can only develop with foreign direct investments. We need both but the participation of zambians into the economy should be a priority for any party in government.

    • So if you have Grant Thornton a foreign firm to do your audits for your mines which are in the hands of foreign companies will they have Zambia’s interests at heart? Why has Mopani & the other mining companies Vendetta etc evaded taxes to the tune of $300million? You may be an MMD member which is ok but just know that the handling of mines & company tax in general in the 20 years under MMD government has been poor. We need to foster & steer Zambian men and women to be at the core of our economic growth before inviting others to come & invest in our country. Look at countries like UK, Canada, Japan, China, Russia, Germany, France etc, they have foreign investors but majority of companies in their economies are local. Why can’t we learn from that? We can not expect private capitalist firms

  6. @Mr. Capitalist – 3 E’s steering economic growth, I like your argument. The other guys are also putting up good arguments for raising the taxes. One question I would like to get a clarification on is, why is it that at election time a lot of foreigners withdraw their monies from banks and only re-deposit after knowing the victor of the elections? I have observed this on at least the last 2 elections for president of Zambia. Capital flight happens so significantly and only normalises after the victor is declared. Is there something that the foreigners know about the candidates that we Zambians don’t. This worries me greatly. I believe this election will definitely not be any different from the last 2.

  7. Bo Musokotwane stop arguing about the disadvantage of having ‘higher taxes’ and concentrate on why your govt is failing to capture the current 30% corporate tax and 3% mineral royalties. Why has Mopani and Vendetta cheated you out of nearly $300m in taxes?. It is either your govt is very incompetent or you’ve been corrupted by the mining companies. Is ZRA fit for purpose? The reason why Zambians are demanding the reintroduction of a windfall tax is because you are so incompetent in your tax collection vis a vis the mining industry. Please get rid of all the District commissioners and use the money for a ZRA Mine Auditing Unit staffed by professional Accountants! Dont rely on those who are only qualified to harass me at the Airport as mine Auditors!

  8. Mr @ 6..world over when the political climate is murky investors moreso foreign ‘withdraw’ or withhold their cash due to what they term as balancing the financial risk against the political risk. However in developed countries were the capital and financial markets are stable you will not see this so much in withdrawals/holding of cash but note the movement on the stock exchange.

  9. The minister is being less than honorable when he says that the mining sector has created jobs. Mining has become a capital intensive venture and has in fact continued to shed jobs despite the growth in the sector. And can the minister explain why an industry that accounts for over 70% of exports is only contributing 1% to the revenue basket?

  10. Ba LT, this is serious now, four people debating and you only report what Musokotwane said?!! Ms Short is quoted in a negative one sentence and nothing else…..pooor journalism. Anyway, the fact still remains, the so-called investors benefit more than the poor people that Musokotwane is supposed to be serving. If you don’t believe me, go to Mufulira, Kankoyo to be specific and see the desperate poverty there while 100m across Mopani is churning billions of dollars worth of copper and transporting it on dilapidated roads.

  11. #6 Tell it like it is,
    the answer is simple. Before the elections, there is an investor friendly party in power (the MMD). However, you have firebrand parties like the PF who are busy threatening the investors that they will be chased should it win. Since it is not yet clear who will win the elections, any prudent treasurer working for these companies will move the funds in case the PF wins and they are chased, with no chance of ever getting the money. When the MMD wins, investor confidence is restored and funds flow back.
    The answer is based on your scenario. I have not had the time to verify your statement (about the funds outflows). Hope this helps

  12. No one is advocating for higher taxes but a reasonable and equitable tax regime representative of an impartial share of our God given resources. This is what rupiah has failed to do for the Zambian people. We know that the mining companies are paying low taxes to the treasury because they finance the MMD party

  13. @Dawa1 and @Mandaliza are misdirecting themselves. Dawa1 mining in Zambia and mining in Australia and Canada is not equivalent to comparing oranges and apples. Mining is mining no matter where it is done. Australia produces close to .9mn ton of copper; Canada and Zambia each produce .7mn ton. The copper processing technologies are the same and the product(s) are sold on the international market at the same price without regard to origin. Mandaliza the problem in Zambia is not necessarily the absence of higher taxes but our own govt’s institutional incapacity to collect whatever level of taxes! We should improve on our institutional auditing capacity! What is the point of increasing taxes when you have no capacity to collect them?

  14. @6..one of the main reasons is POLICY. when an administration is in charge it has policies that it feels must be the centre of their governance. and so when there is a change gvts could change investors are always uneasy coz they dont know what to expect from a different president. take for example comments such as -i will chase all the chinese when i come into power..this surely makes even non-chinese nationals jittery..they just feel they myt experience another idi amin dada..

  15. @simon, splaka and chief, thanks for your brilliant responses. I believe there is need for the opposition then to reassure genuine investors about their safety otherwise the ‘little’ progress of the few years could vanish completely and take another lifetime to restore. Cheers.

  16. OK let us suppose we introduce higher taxes for Miners, then all miners will pack and go? are you very sure Mr Minister these guys will pack and go? Pathological liar!! These so called investors are busy laughing at you Mr minister each time you stand in public to defend them, they think you are an I.D.I.O.T  and may be you are. 

  17. I think the biggest defect I have seen in Minister Musokotwane is that he believes in his own “Prophecy” too much. He needs to stand back and reflect on why it seems he and his MMD cohorts are the only ones who do not see what is so clear to everybody else.

    I can not believe a Minister heading a very critical Ministry in our country is perpetuating the same lies foreign Corporations have used for years to scare off regulation and taxation in Third World Economie—-we will leave if you do AB C or if we don’t get XYZ concessions. It is not taxation regimes that discourages FDI, it is lack of PROFITABILITY.

    Japanese, Chinese, and every Car Manufacturer wants to invest in the USA despite its high taxes, why? Well, profit, profit, and profit! And why should mining be any diferent?

  18. UYU MDALA, ITAYA APA PEVE………………………………………………… BO MUSO…..UPGRADE YOUR DEGREE

  19. The problem is not musokotwane. The problem is RB who continues to keep such quality at such an important position. Our musokotwane does not understand the basics of current trends in international business. At his age he probably thinks he has achieved the highest intellectual levels, even though we are all growing till the end of life. He should up-date himself with modern trends of business at that level so that he understands how corporate managers make strategic decisions..The result is us zambians pay the price for a poor political decision.
    ………. RB is driving us back to the 1970s while the world is moving forward,…….lack of capacity for flexible adaptability…!!!

  20. Firstly, TOZ/Banda, the BBC had a panel of 3 dignitaries being interviewed and all you write about are the brainwashing commentary by colonialist Musokotwane! So since he, Musokotwane was the only one who made sense as far as Times is concerned, can he answer the question raised by splaka @ 9! Musokotwane really sounds like all the other oppressors of third world people. He is now enjoying our taxes, this lazy ar.se and he cannot afford to lose his new found comfort! This man is very lazy, I speak from experience, I was one of his neglected students who cleared with flying colours despite his everlasting missing of lectures at UNZA in preference of consultancy jobs. He worships money and would do anything to keep the status quo! We are changing the government and taxation of mines!

  21. Is Mr Musokotwane happy that the mines only contribute to 1% of the revenue to the country? Regardless of the fact that copper represents 70% of the export. Something ain’t right. It reminds me of a butcher who sells 70% of meat to customers. BUT his tax returns show the meat only contributes to 1% of his cash flow. The taxman will be on his back. As for jobs the Zambian miners working in these mines collectively pay more income tax than these mines. Take into consideration they are low paying jobs. Longterm Mr Musokotwane’s economic policies is risky as Zambia as copper prices flactuate. They won’t always be high. You have to reap whilst the iron is hot to get enough resources from copper to divert to agriculture and tourism etc

  22. Is Mr Musokotwane happy that the mines only contribute to 1% of the revenue to the country? Regardless of the fact that copper represents 70% of the export. Something ain’t right. It reminds me of a butcher who sells 70% of meat which accounts for 70% of his total sales. BUT his tax returns show the meat only contributes to 1% of his cash flow. The taxman will be on his back. As for jobs the Zambian miners working in these mines collectively pay more income tax than these mines. Take into consideration they are low paying jobs. Longterm Mr Musokotwane’s economic policies is risky for Zambia as copper prices flactuate. They won’t always be high. You have to reap whilst the iron is hot to get enough resources from copper to divert to agriculture and tourism etc

  23. THE FACT IS RUPIAH BANDA IS CORRUPT. HOW THEN DO YOU EXPECT RUPIAH TO GET BRIBES IF THE MINING COMPANIES ARE PAYING THE RIGHT TAXES. LET’S ALL COME UP AND VOTE OUT THIS CORRUPT REGIME. YOU WILL SEE JUST HOW MUCH MONEY THESE BAFOONS STOLE FROM US.

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