Saturday, February 16, 2008

(DAILY MAIL) ‘No turning back on taxes’

‘No turning back on taxes’

PRESIDENT Mwanawasa says the interests of Zambians will remain paramount in the dispute mining companies have raised over the revised mining tax regime because citizens are merely asking for a fair share of their own wealth. Dr Mwanawasa said this yesterday at Lusaka International Airport on his arrival from Madagascar. Dr Mwanawasa was concerned that the mining companies were criticising Government for asking for a fair share of the country’s resources when the people who voted Government into power have welcomed the new taxes.

“At the beginning of my administration, I said where there is conflict between the people of Zambia and something else, the interests of Zambians will be paramount,” President Mwanawasa said. “I am unable to understand how they can criticise us when we are asking for a fair share of our resources.”

The President said his was a listening Government and he was, therefore, inviting the mining companies to meet the Minister of Finance and National Planning, Ng’andu Magande, and Minister of Mines and Minerals Development, Kalombo Mwansa, to discuss the matter.

“Mining companies should be prepared to show that Zambia’s rate of taxation was higher than the other countries in the world,” he said.

“We are a listening Government. Instead of shouting on the hill, I invite them to see the Minister of Finance and the Minister of Mines. Let them come prepared; let them show that our rate of taxation is higher. Some countries have taxation as high as 51 per cent, 47 per cent, while we are at 31 per cent.”

The President was concerned that the mining companies were using Zambians to complain on their behalf when they were reluctant to give them jobs, claiming they were incapable.

“When we say give jobs to Zambians, they say they are incapable; when they have to fight battles, they use Zambians to fight the lot.

They might be happy now with the salaries they are getting, what of the majority Zambians? Is it wrong for Zambians to ask for more so that we can improve the living conditions for all Zambians?” he asked.

Meanwhile, KASUBA MULENGA reports that a parliamentary watchdog committee has urged Government to relentlessly pursue the new mining tax regime so that Zambians benefit.

Presenting the final report on the 2008 estimates of revenue and expenditure, chairperson of the expanded committee on estimates, Godfrey Beene, told the House that the equitable sharing of benefits between mining companies and Zambians was an immediate imperative.

“In this vein, your committee wishes to strongly urge the House to support the new legislation that will provide for the new mining tax regime,” he said.

Mr Beene, who is Itezhi Tezhi member of Parliament, said there should be a clear and transparent mechanism for the utilisation of funds that will be raised from the new tax measures.

He said Parliament, as the people’s representative, should play a prominent role in decision-making as regards the usage of the resources.

Mr Beene told the House that several stakeholders who appeared before his committee supported the new mining tax regime on grounds that it will benefit many Zambians.

And Mr Beene said since the Central Statistical Office indicated that the basic food basket costs were between K700,000 and K1.5 million, the tax exemption threshold should be raised to at least K700,000 from the proposed K600,000.

The committee also recommended that Government should look into the high cost of doing business in the country because this entailed that Zambian products were expensive, yet not competitive.

Some stakeholders that appeared before the committee said it was a costly venture to doing business in Zambia mainly as a result of the high cost of finance, fuel and poor infrastructure.

Mr Beene said his committee was concerned about the small number of citizens contributing to national revenues. It, therefore, recommended a widened tax base.

The committee also recommended that due to the continued energy problems the country was facing, Government should find alternative sources of the resource, such as coal.

Stakeholders were also concerned about the reduction in the budgetary allocation to the agricultural sector from 8.8 per cent last year to 5.8 per cent this financial year.

Mr Beene said Government should increase the budgetary allocation to the important sector, especially under the fertiliser support programme.

And Minister of Finance and National Planning, Ng’andu Magande, said the ministry appeared before the committee three times so that issues raised in the budget could be clearly explained. Mr Magande appealed to the House to support this year’s budget.

He said Government’s objective was to continue providing tax relief although it could only do this systematically as the economy improved.

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At 9:29 PM , Blogger Unknown said...


I am encouraged by GRZ resolve to effect the new mines taxes, indeed there appears to be mounting pressure from ordinary Zambians and local organisations such senior citizens organisation.
The mines on the other hand seem to be determined to take their resistance as far as it can go.

I have read the development agreement with KCM signed in 2000.
I am not a lawyer, however I noted in the DA that there is a stability period of 20yrs in the case of KCM and the section on taxation & Schedule 7 in the agreed DA- seems to me at least to give KCM some assurance
a)that GRZ shall not increase rates of taxation ( including , without limitation, corporate income tax or withholding tax rates) applicable to KC from those prevailing at the effective date.

b) Not increase royalty rate.

c) Not amend the VAT and corporate tax from those prevailing at the effective date.

d) impose new taxes or fiscal imposts ( including export duties) on the conduct of Normal Operations...

If GRZ does not intend to terminate these signed and agreed DA with KCM and other mines how do you think these legal challenges will be addresed?
Mwanawasa is a very good lawyer, apart from stating that Zambia is a sovereign nation with liberty to enact it's our laws including taxation, I have not heard him nor his minister offer a legal argument to challenge the signed DA.
Also the DA refers the arbitration of disputes to a "sole expert" - anyone know if this means the "sole expert" takes precedence over/and/or includes Zambian courts?


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