The opposition FDD has questioned the motive behind proposing a tax which would end up being scraped off all together.
Commenting on the removal of the 7.5 proposed tax on the importation of copper concentrates, Antonio Mwanza the Party Spokesperson questioned why the tax was proposed in the first place and wondered what has changed for government to completely U-turn.
He said the only thing consistent about the U-turn is the continued inconsistencies and lack of direction which the PF government has exhibited as regards to the taxation regime on the mining sector.
He further wondered why the negotiations were not done during the pre-budget stage.
“The decision to remove the 7.5% budget proposal on importation of copper concentrates is testimony of how inconsistent and directionless the PF Government is with regards to the taxation regime on the mining sector.
“This U-turn raises more questions than answers:
Why was the 7.5% tax even proposed in the first place? What was the rationale? What has changed for Government to U-turn? Why didn’t the Ministry of Finance negotiate with the mines during the pre-budget stage on the same matter? How will Government recover the deficit of K500 million which we could have recouped from the tax? What dividends will the mines pay to the Government for it to raise the targeted K500 million?” He lamented.
He explained that the country is being ripped off by mining firms due to the lack of capacity by government agencies to ascertain the correct volumes and quality of copper concentrates that mining firms are either importing or exporting.
He said it is due to such inconsistencies that the mines contribute a paltry 18% to the country’s GDP despite the sector being the major export earner.
“Government of Zambia and its agencies such as ZRA have no capacity whatsoever to ascertain the correct volumes, amounts and quality of copper concentrates that mining companies are either importing or exporting as a result Zambia has continued to be ripped off by the mines through under-declaring of profits, tax avoidance and so forth.
“Despite the mining sector being the major export earner for Zambia it’s contribution to the national GDP has been a paltry 18%. Most of the profits mining companies are making are being externalised and together make matters worse the mines combined are paying far less in taxes to the national Treasury in comparison to what the poor workers collectively are paying in PAYE. Government is milking and bleeding it’s own poor citizens at the expense of conglomerates,” he said.
He added “It is criminal to allow the foreign entities to continue ripping off Zambians by giving them Santa Clause type of tax breaks and tax holidays. Mines must pay a fair share of taxes and it is therefore important that the ownership and taxation regime of the mines must seriously be reviewed and altered.”