NGOCC asks Government to introduce production based Mineral Royalty Taxes

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Finance Minster Alexander Chikwanda on his way to present the budget
Finance Minster Alexander Chikwanda

The Non Governmental Organisations Coordinating Council (NGOCC) has asked Government to introduce production based Mineral Royalty Taxes that are commensurate with what the mining companies are making out of the minerals if Zambians, especially the poor are to benefit adequately. In its Tax and Non-Tax proposals to the Ministry of Finance, NGOCC observed that the current Mine Tax obligations were far below the expected contributions to the economy for them to substantially contribute to economic growth and job creation

“A Mineral Royalty Tax is charged on production and this means that the mines will pay the royalties as long as they produce regardless of the copper price. Therefore, a mineral royalty is a better way of taxing the mines. This will result in increased government revenue for poverty reduction programmes, investment and national development, reads the submission in part.

NGOCC has further urged the Government to intensify and broaden withholding tax collection by coming up with effective collection measures to ensure that service providers pay the taxes in full, e.g., collection of rental tax on high value properties. In this regard, the process of operationalising the Integrated Land Management System needs adequate capacitating and resources in order to enable Ministry of Lands to capture all land owners. The organisation observed that there was a marked increase of property being rented out yet not all tax is remitted to ZRA.

“There is also an increased number of consultants who should be captured in the tax net. In addition there is need for ZRA to work out mechanisms of identifying and capturing all tax obligations from consultancy jobs through working out mechanisms with PACRA or other registration mechanisms on various consultancy work,” reads the submission in part.

Meanwhile NGOCC has proposed an increment in the tax-free threshold from K3, 000 to K4, 000. NGOCC observes that the high cost of living – the food basket for a family of 6 has increased to K3,831.24 (JCTR August 2015). The submission further reads “the situation is expected to continue in 2016 due to among other factors the increased prices of fuel. In addition government should consider Zero Rating sanitary wear and essential food items as outlined in the JCTR basic needs basket. NGOCC has also proposed increased allocation of resources to the Ministry of Gender being the spearheading ministry.Focus should also be on other gender implementing institutions to effectively mainstream gender in development policies, plans and programmes and facilitate attainment of the national vision on gender through the National Gender Policy

NGOCC has also proposed the need for sufficient mobilization of resources for the National Referendum on the adoption of the constitution through a wider forum as proposed by Zambians in all the successive Constitutional Review Commissions. This should be prioritised outside the Tripartite Elections of 2016.

And the Civil Society for Scaling Up Nutrition (CSO-SUN), has expressed fear that the budget may not entirely address the immediate economic challenges the country was facing if it would not give attention to matters relating to nutrition.

CSO-SUN executive director William Chilufya said in a statement yesterday that Zambia was currently grappling with a double burden of malnutrition.

Mr Chilufya appealed to Finance Minister Alexander Chikwanda to ensure that he drew people’s attention to the importance of good nutrition through the budget speech.

“A simple statement by the Ministry of Finance on nutrition during the annual budget speech will help keep it on the table as an issue of national importance demanding the required attention and response to it by respective line ministries in the execution of the budget for the financial year,” he said.

Finance Minister Alexander Chikwanda today presents the 2016 national budget

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6 COMMENTS

  1. How many times will the mineral tax be changed especially in the last 5yrs? One thing that puts off investors ,other than load shedding,is uncertain policies and Zed seems to have plenty of both these negatives.

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  2. These NGO’s are useless. Its is just making a statement for the sake of appearing on news. How do you come up with a proposal a day before budget is presented in parliament. You had the whole 9 months from January to September to make those submissions to the ministry of Finance. We need to be serious the way we address issues as zambians

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    • Very st.upid NGOCC, a day before presentation that is when you’re issuing a press statement when you had over 6 months to submit your recommendations to the Ministry.

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  3. NGOCC clearly needs to be taken through a mineral royalty tax calculation. What do they think is the basis for arriving at the tax amount to be paid? It’s not a figure just plucked from the air – it is based on copper produced. This is why 2 tiers of royalty taxation exist, ie. underground and open pit with the latter always being higher than the former as it is an easier way of producing copper. Has NGOCC forgotten about the audit teams that have been put together, even before PF, to go round the mines to ensure there is no under-reporting of production? To be honest, Zambia really missed out – if only windfall tax had been collected during those boom years. I doubt I’ll ever see such high copper prices again in my lifetime.

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    • I am with you @Igwe! And you see the same people (Dr.Musokotwane) that scrapped Windfall Tax critising PF for lack adequate revenue collection from the mines when PF has even tried to collect more but lack proper communication to explain to the masses and lack discipline in expenditure!

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