It's possible to increase royalty taxes through Parliament, says Dr Mwansa
It's possible to increase royalty taxes through Parliament, says Dr MwBy Joan Chirwa and Amos Malupenga
Tuesday November 27, 2007 [03:00]
IT is possible to increase royalty taxes to three per cent through parliamentary approval although the current agreements are binding based on the old legislation, mines and minerals development minister Dr Kalombo Mwansa has said. And a source close to the consultancy team on the renegotiation process has said the government had the power to impose appropriate taxes on the mining companies since it was an autonomous body.
Meanwhile, Forum for Democracy and Development president Edith Nawakwi yesterday advised finance minister Ng’andu Magande not to use emotions in order to run away from the real issues she had raised.
Commenting on Nawakwi’s statement that the government did not need to engage experts to renegotiate the mining agreements because they only needed to make changes to the law through Parliament, Dr Mwansa said the legal aspect of the development agreements necessitated the current procedure of renegotiation taken to increase mineral royalties.
“She (Nawakwi) is right to some extent, but the agreements on the other hand are binding based on the old piece of legislation. We have the agreements which were signed and are binding and that is the reason why we had to find a vehicle for discussing the changes,” Dr Mwansa said.
“Otherwise for new investments in the mines, the development agreements will have the three per cent royalty and not the 0.6 per cent that is stipulated in the previous development agreements for already existing mines.
Even from the procedure the government has decided to take to renegotiate the development agreements with the mines, we are very determined to ensure that we get reasonable returns on mining investments for the country to carry out developmental projects.”
And a source said the government had the power to impose windfall taxes on mining companies in view of the huge profits being made from escalating copper prices on international markets. However, the source said the current procedure taken to renegotiate was “a deliberate step taken to further exempt mines from paying higher royalties”.
“This process is going to take so long and I know that this is a game being played. It is all a deliberate step taken so that these mines can continue paying royalty taxes at very low rates unlike the proposed three per cent which is a world average,” the source said.
“Government has the power to tax. Just like the way it increased the income and corporate tax, it is also possible to impose a windfall tax on mining companies through consultation in Parliament. I know there is too much corruption going on and the whole scam is to delay as much as possible before the mines could start paying royalties at three per cent.”
The source also agreed with Nawakwi’s suggestion that government could take a proposal to Parliament on the current plans to increase royalties and review development agreements for the mines.
And Nawakwi yesterday advised Magande to be level headed when dealing with national and professional matters. She said she was shocked with Magande’s emotional reaction to her humble suggestion for the government to properly tax the mines for the benefit of Zambians.
“You see, sometimes success has a tendency of making a fool to look even wiser,” Nawakwi said. “Magande is boasting that he is successful as finance minister, that the economy is doing well.
But he is forgetting that he is successful on the foundation left by others.”
Nawakwi said she was surprised that Magande was being personal when she did not dwell on personality in her suggestion. She said the real issue is for Magande to collect enough tax for the development of the country.
“What we are saying as his advisers is that we need as a country to correct all the past anomalies because the economic situation has changed for the country,” Nawakwi said. “So there is no need for Magande to be trivial because he is not my mulamu and I was not talking about that.
He is talking about me being a woman and a housewife because he wants to belittle my professional capacity. Tell him to find something else because he will not manage. There is desolation around him and he can’t see.”
Nawakwi said some people, like herself and Katele Kalumba who signed those agreements were still alive so they could help Magande go round the issues if he required help. She said even today, there were some agreements which were concluded under Magande’s hand.
Meanwhile, Dr Mwansa said government expects sufficient flexibility after the change of the mining fiscal regime during the peaks and lows of the commodity prices.
Speaking at a workshop held for parliamentarians and selected chiefs from different provinces in Lusaka yesterday, Dr Mwansa the mining fiscal regime would continue to be weighed against government if it was not revised.
The one-day workshop was called to discuss the review of the Mines and Minerals Act of 1995. The government is trying to revise Act to make room for provisions such as the creation of a platform that could facilitate economic empowerment of Zambians in the mining industry.
Among other things included in the reviewed Act includes the replacement of tax holidays and other tax incentives by tax credits for expenditures made by mining companies on developing infrastructure and other items that fall under public capital expenditure.
Labels: CORRUPTION, DEVELOPMENT AGREEMENTS, EDITH NAWAKWI, MAGANDE, MINING CONTRACTS, TAXATION
posted by MrK @ 9:13 AM
1 Comments:
THERE IS CORRUPTION INVOLVED IN THE VERY RENEGOTIATING PROCESS.
All the lines so far that we have been fed, of these contracts not being renegotiable, of the 0.6% tax on turnover being set in stone, then the 3% tax being set in stone, are a pack of lies.
Magande has put aside his duty the Zambian people and economy, to look out for it's interests only. Instead, he is a representative for the mining companies. He will protect them no matter what, and as such, he is a mining company agent inside the government.
He does not represent the interests of the people of Zambia. He represents the interests of the mining companies. As such, he will not only shield them from sharing profits. He will not only shield them from having to use local companies, and uphold labour and environmental norms.
He will shield them from having to pay taxes, which is in direct contravention of his obligations as finance minister. Or his obligation to the nation.
This is corruption at the highest level of government.
" However, the source said the current procedure taken to renegotiate was “a deliberate step taken to further exempt mines from paying higher royalties”. "
Magande should not only recuse himself from involvement in the renegotiation of these countracts.
If the Mwanawasa government is in any way shape or form serious about fighting corruption, Magande should be forced to resign, and an investigation into his finances instigated.
Look at it this way. Any person of good will and integrity involved in the renegotiation process, will not only be fighting the mining companies, they will be fighting the MMD politicians who have been corrupted by the mining companies.
It is like fighting a war on two fronts. One against the mining companies, the other against ones own negotiating team.
I know there is too much corruption going on and the whole scam is to delay as much as possible before the mines could start paying royalties at three per cent.”
These negotiators will never get the best deal for Zambia. No political party should regard these renegotiated deals as legitimate, and they should let the mining companies know just that.
The source also agreed with Nawakwi’s suggestion that government could take a proposal to Parliament on the current plans to increase royalties and review development agreements for the mines.
Now that would really make a difference - review the mining development agreements in parliament. With public scrutiny by the press.
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