Thursday, February 07, 2008
By Chiwoyu Sinyangwe and Joan Chirwa
Thursday February 07, 2008 [03:00]
MINING companies cannot resist the new fiscal regime because doing so will be against the laws of Zambia, former Public Accounts Committee chairperson Bob Sichinga has said. And the Jesuit Centre for Theological Reflection (JCTR) has said low taxes were only a small part of the huge challenges facing the mining sector in Zambia.
Sichinga said the Zambian constitution mandated the reigning Minister of Finance to impose a tax regime without consulting the affected party.
He was commenting on finance minister Ng'andu Magande's statement on Monday that there would be no room for mining companies to negotiate with government the new mining fiscal regime.
Sichinga, who is also former Kafue member of parliament, said it was unjustified for mining companies in the country not to accept the new tax regime as they had made 'enough money for a long time at the expense of the Zambian people'.
He said before the year 2000, Zambia had a very competitive tax regime in the mining sector but that the Bretonwood institutions forced the government to change the law at the height of the privatisation of key mines.
Sichinga said the decision to impose a new mine tax regime would help to reverse the earlier 'error' that government made by reducing taxes for mining companies.
"What the minister (Magande) has done is the right thing and I would like to commend him for that bold decision. Article 114 mandates the Minister of Finance to impose any tax regime without consulting the affected parties, so what negotiations are the mining companies asking for and why those negotiations anyway," said Sichinga.
And in its 2008 budget analysis, JCTR stated that the revision of the mining tax regime was a progressive step in ensuring that corporate institutions start making higher contributions to the revenue side of the budget.
JCTR however noted that the government needed to address other challenges such as illegal mining, casualisation of labour and inadequate regulation in the mining sector, as taxes were only a small component of the current problems.
"It will also be prudent for the government to remain alive to the fact that low taxes were only a small part of the huge challenges facing the mining sector. As summarised by Fraser and Lungu in 2006, these challenges include inadequate regulation, illegal operations, impunity, casualisation of the workforce, deepening pensioner poverty, lack of linkages to local business and failure to protect the social infrastructure," JCTR stated.
"We hope that the additional US $415 million to be generated from taxes on mining firms would be spread across social and economic sectors to improve service delivery and increase capital investments necessary for integral human development."