By Lubinda Haabazoka PhD
Colleagues just read this statement from the Chamber of Mines. They want to increase loss carryovers from 7 to 10 years. Meaning they want to extend periods of declaring looses when they know that in a fiscal year they made profits but declare losses on technicality. Then they demand the VAT refund arrears to be repaid.
A brief history on that. VAT refund is not capital as the mines claim. VAT is normally refunded to companies to help them, reduce the cost of raw materials. The condition of VAT refund is that you need to prove that the materials you bought are for use in production. The best proof is to give receipts and show the final destination of your products. When then Finance Minister Chikwanda tightened procedures of VAT refunds, most of our colleagues could not show evidence of the final destination and other requirements. That is why VAT was never given to them. Up to now, some have not complied but why do they want government to give them that money? Why call a subsidy working capital? As an individual I get a salary, save some money, build a house, put it on rent and government without even asking my source of income will tax rentals. No consideration of whether I built the house using a loan or not. So why should the mines bully government on taxation?
The chamber of mines mentions that they want to want to increase production to 1 million tonnes a year. As a country we are not interested in that amount because the more they produce, the more we lose because their contribution to government tax revenue is insignificant.
How can you pay mineral royalty of 3.5% and then fail to declare corporate income tax despite the fact that you receive $700m in VAT refunds, $240m in electricity tariffs, $60m in fuel subsidies? It’s high time the mines came on board to help government raise resources.
Government buys power from Maamba coal plant at 13 cents then sells to the mines at 6 cents when households and other companies pay 9 cents? Mines should stop holding government at ransom. It’s a pity that every time government moves in to correct the wrong, the mines start retrenching employees. Instead of employees siding with government, they side with mines therefore promoting the same problems.
I understand that mine tax policy should be consistent. But how do we promote consistency of nonpayment of corporate income tax?
What the mines should understand is that there are other investors watching on the terraces! This includes the option of nationalising non profit posting mines. We are alive to the fact that copper is the next gold!!
A conventional car now uses about 12kgs of copper. An electric car uses about 60 kgs of copper cables. By 2030, the European Union will move to 100% electric cars! Other developed nations are also moving in that direction. So copper is the past, the present and the future.
Zambia has enough qualified specialists to move in. We are moving in slowly to correct the situation. Mines should find a way of posting profits like their counterparts in Chile. Mining in Zambia is easier than in Chile. And by the way, at the rate we are mining, we maybe only have a decade or two of copper remaining. I am even scared when we even increase the figures to 1 million tonnes.
By the way, can we be told where the over $4.8bn raised from sale of over 800,000 tonnes of copper is and maybe how it was spent? How much of it reached Zambia? Why didn’t it reach Zambia? Where is the warehouse of copper that we send to Switzerland? In China, location of those warehouses is known. Where is the copper sent to Switzerland stockpiled?
These are some of the things government and citizens of kamakonde, Kankoyo, etc want to know?
We don’t need people benefiting from the mines to engage us in semi baked academic debates and telling us that the current situation is ok. We know that the current model of mine ownership is dead until we see mines contributing at least 40% to GRZ’s national budget! When government borrows money to do a road in Chingola, we ask where the money from the mines in Chingola goes to? We can’t push so many responsibilities to a government we can’t fund!
At $6000 of copper per tonne, even Street kids on the Copperbelt should feel the positive impact of mining. The whole Copperbelt economy is based on mining so colleagues we need to see your input. The number of experts has increased once more in towns like Kitwe meaning business is booming again. But that boom should reflect in control 99.
The Chamber of mines further say that we can ill-afford to resort to “Father Christmas type”, fanciful, unresearched, archaic commentary that have had ruinous effects on our economy and the people of Zambia in the past. I understand that the authors of the statement were never in Zambia when ZCCM did wonders for this nation. I understand that despite the fact that the statement is signed by someone with a Zambian name, the paymasters are foreign. If what I am saying is not researched, why not dispute my figures? I know probably there are other real figures we might not be given but from mine owner boasting and other consolidated financial statements colleagues post abroad, we have indications of what is happening.
Its is unfortunate that the chamber of mines uses words like “Father Christmas type” and ”Unresearched archaic commentary”. What needs to be understood is that there is problem. Where there is a problem people look for solutions. Fortunately this time, we shall ensure that solutions are implemented. I just advise that people up their game and contribute positively to Zambia’s economic development agenda. Some of you are Zambians so your loyalty should be with the country. Have respect for us. We have trained many of your employees!!!! Do not underestimate us.