THE Chamber of Mines says calls to re-introduce windfall tax in the mining sector will not help Zambia’s economic growth but will instead strain operations of the mines.
Association chief executive officer Fred Bantubonse said the windfall tax is not in the best interest of either Government or mining companies as the re- introduction of the tax will shrink the mining industry.
Windfall tax is a higher tax rate on profits that ensue from a sudden windfall gain to a particular company or industry.
Mr Bantubonse said Zambia needs taxes that guarantee benefits for both Government and investors and not ones that choked the much-needed investment.
He said taxing mining firms based on the profits could scare away investors who have invested heavily, created direct and indirectly jobs for Zambians, and are already paying variable tax.
The variable income tax system ensure that income from all the profit above normal is collected but the system spares companies from being taxed on their normal revenue.
“There is a different windfall tax already in the country in the name of variable tax, introduction of windfall tax may not help the country…the problem is that a lot of people are under the impression that mines are not paying tax,” he said.
He said for any tax to be acceptable, it must allow investment to grow and business to be sustained.
Mr Bantubonse said what Zambia needs is a win-win situation and not a condition that would kill the industry.
The windfall tax was introduced by Government in 2008 and later revised to variable income tax.
The former Government constantly cautioned against attempts to recall the windfall tax for mining companies to avoid a leap towards economic destruction and that a lack of understanding between tax systems could also collapse the economy.
Recently, Mines minister Wilbur Simuusa said the PF government will revisit the issue of windfall tax with full consultation of stakeholders to have a win-win situation.
[Zambia Daily Mail]
Bantubonse seems to know. now after we have voted he comes out with this!!!!
The first presidential prouncement that HE MCS made in an interview with Reuters was that the PF govt wouldnt reintroduce the windfall tax; so isnt this article redundant/fear of the unknown?
Bantubonse doesnt understand what a winfall tax mean,its a win- win situation for both parties involved and agreements continue to be evaluated so that every one is happy.The only thing that i know about Mr Bantubonse from kalulushi is a beneficiary of the mines so he fears he may lose contracts,no!! he doesnt just understand
oxmos,
u’re the one who does not understand anything about the windfall tax, this will stifle the growth of our industry. Please let not the PF Govern introduce it
Am sure this man was one of the team that benefited from this theft together with mmd how on earth can he say this can choke the industry when the same industry was able to give) and mmd huge sums of money, mr everybody(bantubonse) I think your time is coming aswell
last laugh-reuters misquoted Sata. Sata even during campaign promised to re-introduce the windfall tax. Which he has said that his government will re-introduce but with consultation. The windfall taxes will replace the variable tax. The variable tax was introduced by the Rupaih government which according to the details is not a good tax. The windfall tax is the best one introduced by Levy Mwanawsa. It is a tax that is taken from the abnormal profits that the company makes. It is also prevents companies that want to lie to government that they have made losses to still pay the tax. Therefore the companies record the real profits that they make and are taxed accordingly.The companies that are operating in Zambia calculated make to profit out of selling the copper at $3500 but copper is $8000
Mr. Bantubonse is entitled to his opinion, but we serious need a tax regime that enables our gov’t to collect enough revenue for the benefit of Zambians from OUR Copper. It is shameful that Copper amounts to over 70% of Zambia’s export yet only less than 3% is contributed towards our national budget. Let’s maximise on benefits from Copper as its a wasting asset which when depleted the so _ called investors will leave us with craters and a polluted environment.
@Fred Bantubonse, what do you know about mining? you are not even employed by a mine. this is for the benefit of the zambian people not you crapy self. what good is it if we allow these infestors to come and get all the waste asets and go? what will happen to the increased population which will be left behind with holes all over the ground they are stepping on? Fred Bantubonse, jst because u hav a salary now doesnt mean others shouldnt enjoy. HE Sata please fire the ***!
Haha ! We will not live to please the so called investors who just leap where they never sowed. It is just a matter of common sense to realize that copper is a wasting asset. When this commodity which , as at now, is and has been our major forex earner finally gets depleted or exhasuted your so called investors will take capital flight and invest elsewhere only to leave zambians walloping into poverty. After all they will have reaped big from our god given resources. Wake up! let us not be blackmailed by the saying that windfall tax will scare away investors or stagnating economic growth.
The UPND govt would have done better than this PF govt, we all know that PF are team B of MMD and operating on a borrowed manifesto from UPND. Zambia you are in for a big joke of year…
UPND u’v made Zambians stop voting for any Tonga coz of yo ka useless UPND HH wu pretend to represent Tongas, he’s embarassed us dat HH greedy selfish traitor.
@BMC UPND will never rule….unless everybody becomes tonga…no one can ever borrow from h.h not even upcoming Elias Chipimo jnr.
How much have your been given by the mines to say such rubbish. Are your really Zambian Bantubonse.
Bantubonse should not mislead the people we want windfall to be introduced, foreign investment has benefitted at the hands of our suffering and loss. Choke what?
What is the difference between Windfall tax and Variable Tax? Can somebody knowledgeable explain with actual figures of how these two tax methods operate or would operate in Zambia…setting out the trigger prices and applicable tax rates for both methods.
Bantubonse is out of touch. I don’t like Zambians who connive with foreigners to steal from Zambia. It is the worst form of treason., it is worse than armed robbery!
If I recall correctly, there’s a reason why Levy and Magande introduced this tax. The mines threatened to leave and Mwanawasa asked them to do so, but did they leave? No. That should show you that they were still making money. In the USA, a capitalist nation, citizens are protesting on wall street that they are tired with the status quo of the 1% owning 99% of the resources. Simply put these people are stealing in the name of capitalism and Zambia must benefit from Zambian resources. Bantubonse is a fraud…
TURKEYS DO NOT VOTE FOR CHRISTMASS NOR DO DUCKS DRAIN THE POND THEY SWIM IN. So what do you expect from the chamber of mines
Fred, you are a disappointment to the nation. All these many years in the mining industry and you still cannot see beyond the demands and interests of the investors. Look at the needs of the Zambian people first. The mines are our only inheritance. You are a disgrace and should bow out your position. If they, the investors are not happy, they should leave Zambia.
PF have no capacity to handle the the issue of windfall tax. Mark my words Sata`s government will be intimidated by the mines. These guys know that Sata`s cabinet cannot handle complex issues like the windfall tax. Mwanawasa`s cabinet succeeded because thay had the spine and brains to deal with complex issues.
iwe bantubonse for how long is our copper going to be mined before we start benefiting?
Keke, you are lying. Who told you Sata cant use the same civil servants Mwanawasa used. Politicians give policy guidelines then experts handle the issue and ministers just sign. Just like the minister of education, he or she does not do the actual teaching. He hires good teachers like you to produce good graduates
Windfall tax is based on super-normal revenues, variable tax is based on super normal profits. To put it simply a windfall tax is very unfair.
In the windfall tax scenario the mines are taxed on their revenues, then again on their profits through a general corporate tax and also have to pay a mineral royalty. It does not regard a firm’s cost structure.
The variable tax, effectively increases the corporate tax rate when copper prices reach a certain threshold. In this way mines only pay a tax soley on profits generated. This tax regime considers a mines cost structure and the fact that in times of higher profitability a mine may engage in high capital expenditure. Windfall tax does not.
To put it simply if you implement windfall tax there is a good chance mines will not continue to invest in Zambia because of the tax burden. Cash they would otherwise be using for re-investment will not be available. What you haven’t heard politicians talk about is that over the last 3 years the mines have been expanding their operations drastically, a lot of this has probably been funded by a mix of revenues generated and external capitalization. The tax regime has been pro-investment. A return to windfall taxation will undo that progress.
Investors and investment is always good. What is needed is not more taxes, its better regulation and transparency. Better transparency will ensure that all the taxes that are already due to the country are paid.
Thank you for your comments, however, these mine owners inflate operational costs & under value the Copper at the point of sale as evidenced by report on Mopani. Furthermore, reinvesting means faster depletion of our Copper for the investors’ benefit, what we need is a win – win situation which the mine owners have not been willing to do.
Mr. Fred Bantubonse has unfortunately, with a few other former ZCCM bosses still in the mining industry, represented the interests of the outsiders. Being Zambians, they water down the debate becos they appear to sound the ‘reasonable’ voice. But is it true that the windfall tax will choke the mining companies? My definition here is taken from Investopedia: “A tax levied by governments against certain industries when economic conditions allow those industries to experience above-average profits. Windfall taxes are primarily levied on the companies in the targeted industry that have benefited the most from the economic windfall, most often commodity-based businesses.”
Thankfully, we now have the mines minister and Bob Sichinga who know enuf to take a reasonable stance.
We need to collect more money from the mines whether they like it or not. Look at what ZCCM left for the copperbelt: stadia, beautiful mine houses, well constructed road networks, play parks for our children etc. These mines have been in Zambia for over 10 yrs now I personally cant see the real contribution to our communities apart from empty pits left in ndola by mopani. Kansanshi has been in solwezi for 5 yrs now but alas look at the infrastructure! They are not interested in our affairs. If experts are saying we are not reaping enough from our mines, why do we have to debate the issue of windfall tax? We need money to build roads and hospitals. Bantubonse is a fool cos he only thinks about himself and his kids. The chap is rich cos of contracts he gets from these mines. He is afraid.
@ Thoughts: please refer to definition of windfall tax. Also the TRUTH is NONE of these mines would close tomorrow if the tax were to be introduced. Even if they did, do you know how many investors are waiting in the wings? Read the authoritative “global mining’ newsletter (you have to subscribe with a fee).
By the way these mines have a life span, they are not like a well that never dries. Kansanshi, for example, has a life span of 25 yrs and so far 5 yrs is gone. We have 20 more. The question that one should ask himself is how much has Zambia benefited in the past 5 yrs and how much are we going to benefit for the next 20yrs before its closed down? We also need to bear in mind that copper prices are never stable, one day they are up the other down. We need to take advantage of the high profits that mines make when things are good. They say make hay while the sun shines.
@20&21
WELL ARTICULATED BUT MY QTN STILL IS WHERE THE HELL DID THE MAD DOGS OF RB AND SITUMBEKO TAKE OUR MONEY IF THEIR TAX REGIME WAS THE BEST TO WORK WITH
#17. you sound a naive person. If truelly there are zambians who have a solution to widfall tax why not bring ideas on board.?? It is naive to see the country go to the drain at the expense of investors when we have altenative solutions within oursleves. You sound like your dream and interest is to see this government fail. its like you would cerebrate if your our cousins, sisters wallop in poverty that is no sense.
Bantubonse you think that the investor will leave because of windfall Taxes, let them go! We got the experience to run the mines on our own. When KK was president, we were runnin the mines, (ZCCM).
The mines have already recovered their intial investment so why do they still want to win more?? Windfall it shall be, Oh King!!
I dont agree with Mr. Fred Bantubonse’s comments on windfall taxes. He is an interested party and I dont why he is coming with such comments. What has he been doing all along. During MMD govt the man zee and that the PF wants to engage all stakeholders on the subject of windfall taxes he is offerring advice that the mine investors will be stiffled and may be scared off. They have mad enough profits at our backas coz of people like Fred. Hon Simusa said govt shall engage all stakeholders on the subject at hand. Fred stop giving misleading statements just coz you are CEO and earning a good salary whilst the majority of citizens are wallowing in poverty.
Perhaps we need to repossess the mines so that they are run by the Zambian Government. If all goes well, then we will stop worrying about investors and collection of windfall tax from supernormal or excessive profits. The question then we will need to ask ourselves is who will be our major customer of copper and other minerals. CHINA!!!!!! And they could easily introduce predatory pricing to kick us out of the market as their other companies are operating in DR Congo, Angola and other African countries. Then we will look to the West, who are also looking to China for survival. And then we will privatise the mines again. It is a vicious cycle. Wake up!
The truth of the matter is that the govt is busy getting advice and comparing notes. Mr Bantubonse is not the alpha and omega of the process. Even if he says this the govt has a right to negotiate with stake holders. Remember it is a win-win situ.
Indeed we need to wake up! Kaunda did it too! He Nationalised the Mines so that can have more money in our pockets. And what happened? Kaunda gave us WHITE MENS jobs through ZAMBIANIZATION. He to promised us an egg a day, A Pint of Milk a Day, Shoes on our Feet, Free Education, Medicines in our Hospitals, Cheap Mealie Meal, Cheap Petrol, and all the good things that REAL money cant buy. He biult schools, Hospitals, Universities, Roads, Bridges you just mention it and Kaunda did it! WE ENHERITED £3 billion FROM THE COLONIAL MASTERS. What happened? Well perhaps since Mr. Chikwanda is back who was also our Minister of Finance then, he will not repeat the same mistakes. He has enherited $2.5 BILLION to kick the start the party. Indeed let the party begin!
Bantubonse has OVER-STAYED and is too comfortable. He’s just protecting his interests. We don’t need such people.
I am smelling a BIG rat with Mr. Bantubonse’s statement, either he is benefiting greatly from the status quo or he is dead wood himself!!!!!! simply put windfall tax is tax imposed on supernormal profits, meaning that with copper prices being normal these mining companies will still make normal profits and be able to operate their businesses….INVESTORS WILL NOT RUN AWAY!!!! WHEN WINDFALL TAX IS INTRODUCED, its time we started to speak for our mineral resources for the sake of posterity. Bantubonse is completely off his rocker.
Iwe Bantubonse, windfall tax choking which industry? This thing of so called investors leaving the country is just an illusion by some people like you bantubonse. Let the so called investors that you so much fear will leave this country because of windfall tax leave, but i can guarantee you they are not prepared to go to South Africa and meet Julius Malema there.