Parliamentary select committee backs new mineral taxes
Parliamentary select committee backs new mineral taxesBy Staff Reporters
Thursday February 14, 2008 [03:00]
THE Parliamentary Select Committee appointed to consider the 2008 budget has observed that the apprehension by some mining companies over the new mineral tax regime is unjustified and unreasonable.
And United Nations resident coordinator Aeneas Chuma has said mining companies should recognise that the government had a sovereign right to raise taxes to mobilise resources for national development.
The select committee which was chaired by Itezhi-tezhi member of parliament Godfrey Beene observed in its final report that fears by some mining companies that the new fiscal regime would require operators that were not yet profitable to pay taxes were unfounded.
“No company can be required to pay tax if it is not making profit,” the report read in part. “In the light of the foregoing, your committee strongly urges the government to relentlessly pursue the matter until the Zambian people get what is rightfully theirs from their natural resources.”
The report recommended that since circumstances had changed after the government’s entering into the current development agreements with various mining companies, the legislative route was the right way to go to provide for matters of taxation.
“The statement that the new tax regime proposes an effective tax rate of 79 per cent is also misleading. In fact, your Committee understands and agrees with the government that the effective tax rate will be around 47 per cent,” the continued.
“Noting that the exploitation of the country’s mineral resources should primarily benefit Zambians, which has not been the case in the past, we strongly support the proposed new fiscal regime in the sector as it is in the interest of the country.”
The committee members urged their fellow parliamentarians to support the legislation that would provide for the new mining tax regime.
The committee also welcomed the proposed introduction of 15 per cent tax on exports of copper concentrates, saying the measure would add value to copper exports and generate employment.
Commenting on the standoff between government and the mining companies over the new mining taxes, Chuma said the UN in the country was of the view that the government had done enough research and that there was enough room for the government to revise upwards the mineral taxes.
“The government has the sovereign responsibility to raise and mobilise resources aimed at helping it plan the development of this country and make investment coming in the country better, necessary to uplifting the welfare of the people,” Chuma said.
“And a lot of partners feel that the government has done enough research to establish that there is enough space for the government to collect a fair amount of revenue not just from the mining sector but also all sectors including the citizens of the country… and that is its legitimate function of the government.”
Asked to comment on claims by mining companies that new tax regime would harm further investments in the sector as it would result in reduction on return for mining companies, Chuma said the new taxes were still attractive and competitive.
“We feel that there is still an opportunity for the mining sector to realise a reasonable rate of return on their investment even after the new fiscal regime and also enough space for the government to get fair amount of revenue from the (mining) sector.” said Chuma.
And contributing to the motion of supply in Parliament on Tuesday, Chilubi member of parliament Obius Chisala said it was extremely embarrassing that some mining companies were resisting the proposed tax regime. He said Zambia should stand firm on the proposed tax regime.
“When the bill is brought in Parliament on the mining taxes we should pass it,” said Chisala. “Enough is enough. If these mining companies are not ready to pay the taxes, they should go back to their countries and leave our copper.”
Meanwhile, British High Commissioner to Zambian Alistair Harrison described the decision by the government to increase tax in the mining sector as “a noble move.” He said the British government fully supported the move especially that it would enhance the government’s efforts in alleviating poverty.
“We support the government in its quest to get a fairer deal out of the mines. These are the resources meant to benefit the citizens,” High Commissioner Harrison said. “It is a good move the government has made and I think the position of the British government has been made clear.”
Labels: AENEAS CHUMA, GODFREY BEENE, OBIUS CHISALA, PSC, WINDFALL TAX
posted by MrK @ 4:02 AM
1 Comments:
The approval of the new mines taxes by the select parliamentarian committee is one firm move in this complex game with the miner owners.
ZNBC Live TV is now available online here http://216.139.229.184:7007/live_tv_zm ( mind the time diff in the US station opens 2am CT closes 4pm CT)
I watched Magande put forward a powerful argument about the profitabiliy of copper mining with the new taxes. He also argued that Zambians have gotten a raw deal since the 50's.
Mwanawasa come on upon arrival to reinforce that other countries charge more in taxes than what Zambia is currently proposing.
Good political arguments but Govt needs to do more spin and I hope some off camera reach out to mine owners to win; because after Mwanawasa spoke what follow 60 min later was a confusing documentary by KCM outlining the scale of their investment and how many Zambians they employ. They even had a Mayor and DA of Chililabombwe spin on their behalf, how the town was dead now coming back to life.
It a battle of hearts and minds, the Govt also needs to be graphic in exposing the how much mine owners are ripping us off albeit in a savvy manner. The have the Copperbelt chamber of mines, a few MPs still, the miner workers, the International business community and Zambians to win over before the taxes are realised.
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