Mining taxes: no room for negotiations
Mining taxes: no room for negotiationsBy Editor
Monday February 04, 2008 [03:00]
The selfishness of our friends is frightening. From the time mining started in the early 1920s in this territory, our friends have gotten away with everything, leaving nothing or very little for us. We shouldn’t forget that from the very beginning until about 1971, it was foreign investors who mined our minerals.
But the question is: who benefited from the over 50 years of these foreign investors mining in this territory? Definitely, it’s not the Zambian people nor their country. Literally everything was taken away to develop other lands and other people while we continued to wallow in poverty with no schools, no hospitals and no infrastructure.
We are not in any way being discriminatory; we are merely stating the truth, facts as they stand. What did our friends leave for us in 1964? What schools had they built for us from mining income? What hospitals did they construct for us? What infrastructure had they built for this country from mining income? Almost none. In 1964, our new nationalist government had to embark on a programme of building schools, hospitals, roads and even airports, including the Lusaka International Airport.
They had to do all this mostly with borrowed money because our friends had left nothing; empty coffers was all they left us with. We say this with confidence because we had the opportunity and privilege to ask the first finance minister of this country, the late Honourable Arthur Wina, how much money he found in the coffers at independence. He told us there was nothing substantial. And because of this, he had to quickly start borrowing from international financial institutions for the construction of hospitals, schools, roads and other infrastructure the country urgently needed.
This is how our friends operate. They have no compassion or consideration for others. Everything must be in their favour. When they do business with us, it always has to be on their terms. It should be them to set the prices, the taxes and everything. This is not the way to deal with others. Things must change, everything can’t continue on their terms. They have had it their way for too long. From the days of the slave trade, they determined the prices and set the profit levels without any consideration for our plight. What type of partnership is this? Even today when we do business with them, everything must be on their terms – they set the price, they determine the quality and literally everything else.
Even our government should be at their service, it should be them to set the taxes they should pay. What type of arrogance is this? The new Zambian, the new African will not continue to take this rubbish forever. Things must change, they have to change. This is not a relationship that can be said to be of mutual benefit; it is one of the exploiter and the exploited, it is one of servitude. There is no dignity in our dealings. It is too one-sided to be a fair deal. Can’t they see that there is something wrong with the way they deal with us?
Even those who have come to stay here and pretend they are part of us, their behaviour is no different from the so-called foreign investors. What type of brotherhood is this? What type of solidarity is this? You go to the banks, more than 90 per cent of the money lent out is to them yet they constitute such a small percentage of our population. At one time, they used to advance an argument that we can’t be lent money because we don’t pay back. What nonsense! Go to Barclays Bank or Stanchart and find out how many millions of dollars they have lost from these same brothers of ours who they disproportionately lend money to. It is they who don’t pay, not us. But they keep on giving them what they want. Why? Is it racism? We don’t know!
We are happy that our government, our people are starting to realise that things must change; there has to be a sense of justice and fairness in our dealings with these brothers of ours. We are not going to drive them away because they are very much part of us, and we need them as much as they need us. But now they also have to learn to meet us on our terms – it can’t always be on their terms. They have gotten everything they have wanted for too long. Whatever they have asked for, we have generously given. If they wanted land to build hotels, the government has freely given them. If they wanted favourable taxes, the government has bent backwards to accommodate them. In short, they have gotten everything on their terms. Everything has got a time, things have to change.
We agree with finance minister Ng’andu Magande’s determination not to change the new mining fiscal regime in response to their demands. These changes are actually too modest. If we were in government, they would be paying a bit more than Magande is asking of them. And it has to be realised that this new mining fiscal regime is not a product of arbitrariness. A very competent and honest team of Zambians was assembled to investigate this issue and come up with recommendations. And it is on their recommendations that this new mining fiscal regime is based.
But again, because of the arrogance of our brothers, anything that is done by us is never good enough, only they know what should be done. Today there are threats that if the government does not bend backwards, investment in the mining sector will be negatively affected. This is not true. And if it is true, our response will be: let them go and take what belongs to them and leave for Caesar, for the people what belongs to them.
Of what value would mining be to us if we are not getting any benefit from it? If we are unable to come up with deals that are beneficial to our people and the country, then we should stop getting into any mining deals and leave this to the future generations, to the Zambians of tomorrow, who may be in a better position to exploit these minerals to their own benefit.
We need to create a situation in which the Zambian people have a direct share in the wealth produced by exploitation of their mineral riches in a way that translates into improvements in their quality of life and level of well-being. This is an appropriate reciprocity for the reduction in natural capital resulting from exploitation of non-renewable resources, an exploitation that can generate significant negative impacts.
We have to permanently put an end to a regulatory and tax framework for mining that clearly benefits large-scale mining to the detriment of our country and our people. And let’s ensure that all the time our people, the citizens of this country, are able to impose their views on those who govern and an industry increasingly distant from the concept of great politics in which the public task evolves strategic vision.
We cannot continue to develop the mining industry at the cost of ceding to multinational corporations practically all the income that belongs to the country and its people. Now is the moment to change these policies. Zambia needs the income from its copper for development and to protect its citizens. Mining uses a non-renewable resource, which means that there is an economic rent that belongs to all Zambians and which at present is almost appropriated by the industry.
It is this fact that justifies a new mining fiscal regime. It is the evident injustice of the mining sector’s level of contribution that inspired many Zambians to agitate for a change in the mining fiscal regime in order to address this deficiency that is generating distortions and inequalities. And as we have stated before, this is supported not only by our own lawmakers, but also by various resolutions and reports of organisations such as the United Nations and the World Bank.
We hope the measure the government has decided to take will be fully supported by all our politicians in Parliament and will help the mining sector’s contribution to meaningfully increase and consequently raise the sector’s contribution to the development of the country to higher levels and lift our people out of poverty and despair.
Labels: DEVELOPMENT AGREEMENTS, WINDFALL TAX
posted by MrK @ 4:05 AM
1 Comments:
A few points
- Isn't it remarkable how many of these mining companies are just lying to serve their own interests?
- The sheer arrogance of giving neoliberal dogma precedence over the direct financial interest of the country and the economy. Zambia needs these hundreds of millions of dollars to invest in infrastructure, agriculture and manufacturing. The same infrastructure the mining companies use to move their product, but haven't contributed to because of their tax exempt status.
- I agree with The Post that the mining companies should be paying even more. They are said to be about to contrubute over $400 million, but I think $600 million is much closer to the 25% corporate tax on profits they are supposed to pay.
- I think the goverment should be taking in lots of money when the copper price is high, and set aside part of that, to buy up mining company shares when the market turns down. If of the $400 million, they could put $300 million into infrastructure, and $100 million aside to buy up (say) Equinox, KCM or the shares of other mining companies that are operating in Zambia, the Zambian state would benefit from the mining industry for a long time to come. But the key is to make lots of cash when prices are high, and buy up shares when the stock market is low.
- The Zambian goverment could use some of it's revenues to lock in the high price of copper on the commodities markets, using futures and options.
There is a world of good options available, as long as the government collects enough taxes or profits from the mining industry.
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