Tuesday, January 15, 2008
By Kabanda Chulu
Tuesday January 15, 2008 [03:00]
ECONOMICS Association of Zambia (EAZ) national secretary Chibamba Kanyama has said mining companies should be asked to offload 10 per cent of their shares to the Zambian public through the stock markets. Commenting on President Mwanawasa’s announcement that the government would increase mineral taxes from 31.7 per cent to 47 per cent in order for the country to benefit from mining revenue, Kanyama yesterday said the mines actually called for government’s action.
“They should have voluntarily called for renegotiation of the agreements when the calls for higher taxes started a few years ago. In last year’s budget, finance minister Ng’andu Magande hinted on this issue but the mines decided to ignore him,” Kanyama said.
” But it is high time the mines offloaded at least 10 per cent of their stake to the Zambian public through the stock market. With the profits they are reaping, it looks likely they will not want to do so, but the longer they take, the more Zambians will push for even higher taxes than announced by President Mwanawasa and if their shareholders abroad are desperate about an immediate pay-back to their investment, let them offload their stake to Zambians who can redeem them now.”
He explained that the argument that the Zambian stock market was not deep enough was not true.
“Considering the over-subscription of the Copperbelt Energy Corporation shares, Zambiaa has enough liquidity to support the mining sector through the stock exchange to as much as US $1 billion and the moment they do so, government will be pleased that part of the gains in terms of high copper prices will be enjoyed by its citizens,” Kanyama said. “Under such circumstances, taxes can even drop and there will no longer be any debates about windfall taxes. But the mines have not shown good leadership and negotiation skills in this area and they are bound to pay a higher price in future.”
And Kanyama said the mining companies should not look at the government’s intention to increase taxes as policy reversal but an act aimed at redressing inequalities arising from wrongly drafted development agreements.
“There will certainly be a lot of resistance from the mines using their international influence on the new tax regime. The mines will see the pronouncement as policy reversal and will ensure this issue is reflected at the international forums at which Zambia will be singled out as a country, besides Zimbabwe, that has reversed on policy and their messages will be aimed at sending a signal that Zambia abrogates on agreements, cannot honour contracts with the private sector and should, therefore, not be taken as a worthy destination for foreign direct investment or any form of financing through the private bond market,” said Kanyama.