In a statement in response to a press statement issued by the Chamber of Mines last week, the civil society organisations restated their position that the resources should be left in the ground for exploitation by future generations if current regulations are deemed too onerous by potential and current investors.
The organisations are part of the Publish What You Pay Zambia and the Zambia Tax Platform.
“We wish to re-emphasize the we are in total support of having progressive tax reforms in the mining sector, however, the proposed tax bands as the floor and ceiling tax rates pegged to the value of the mineral on the London Metal Stock exchange are too low, investor led and do not represent the interests of the Zambian people in getting a meaningful compensation share for mineral extraction,” they said.
They added, “It’s of our understanding that the mineral royalty tax is meant to be a compensation for mineral resource extraction, but however the new tax bands will not enhance revenue collection for compensation in times of commodity booms which subsequently lead to increased production in the mining sector.”
They also expressed displeasure at statements issued by the Chamber of Mines president Nathan Chishimba who amongst other things claimed that civil societies reasoning on mineral resources was “short-term thinking” by claiming that “mineral resources are finite, and Zambia needs to make the most of what it has while it has it.”
“We wish to remind Mr Nathan Chishimba that Zambia has been mining for over a century and evidently Zambia has not been able to make the most of resource post privatization which subsequent come with a number of incentives,” they said.
They charged that it is immoral for a country with high levels of poverty and inequality to continue to make decisions of this nature that compromise its ability to generate its own resources and address its challenges domestically.
“We Civil Society also wish to re-commit ourselves to research on the impact of current tax regimes and campaign for reforms at the national and international level to ensure that the taxing rights of our countries are not undermined by abusive international tax practices and investors. Consequently, we will neither be intimated nor silenced on this matter.”
They added, “With respect to this, we firmly demand government to justify and disclose to the public the tax revenue that will be forgone with the implementation of the new tax regime sliding mineral royalty tax regime verse the double tier regime of 6% for underground and 9% for open cast mining as legislated in the 2015 Mines and Minerals Act.”
“Furthermore, we urge government to consider engaging in a more consultative and participatory process in developing taxation regimes and we also urge our governments to establish mechanisms to conserve adequate revenue gleaned from mining operations for future stability, growth and unforeseen downturns,” they said.