Former President Rupiah Banda says re-introducing windfall tax has potential to scare away investors in the mining industry.
Mr Banda indicated that implications of introducing the windfall tax are huge on the nation and may result in the loss of jobs in the mining industry.
He was speaking today when he officiated at the launch of the project on the increased accountability and dialogue on political party manifesto development in Zambia by FODEP.
He said it is unfair for Zambians to think that foreign investors can continue investing in Zambia when they are over taxed.
Meanwhile, First Quantum Minerals (FQM) says meaningful dialogue should take place in order to find a solution that balances investor interest and that of Zambians as the debate on windfall tax rages on.
First Quantum Minerals (FQM) Head of Tax, Adam Little said that the tax rate would surpass 100 percent and force mine owners to shut down operations if windfall tax was brought back.
“Overall tax rate if windfall tax was brought back will be 122 percent. You will never find any country charging taxes at that rate.
“Windfall tax is not the answer. The way to get at the answer is through meaningful consultation between all stakeholders,” he said.
Mr Little explained in a statement that windfall tax would attract 122 percent if the price of copper was above $3.50 per lb, 97 percent if the price was between $3.00 – $3.50 and 72 percent if it was between $2.50 – $3.00.
“Think of that. I make $100 of profit, I have to pay $122 of tax! The only thing I can do when that happens is stop production and shut the mine.
“For the high cost mines that aren’t so profitable, the tax rates would even be higher,” he said.
FQM’s Kansanshi Mine, co-owns with government (FQM – 80 percent and GRZ – 20 percent), pays a total of 42 percent in taxes under the current mining tax laws in Zambia.