Maravi

Scott threatens mining companies with demos

Scott threatens mining companies with demos
By Joan Chirwa
Friday February 29, 2008 [03:00]

MINING companies are doing a lot for Zambia and should therefore be given time to discuss the proposed tax regime with experts, Chamber of Mines council member Jeremy Allen has said. But Lusaka Central PF member of parliament Guy Scott has said time had passed for negotiations with the mines as the new taxes would pass without any amendments considering that all Zambians were in favour of a tax hike for the mining companies.

Appearing before a parliamentary extended committee on estimates yesterday, Allen, who is also general manager for First Quantum Mineral Resources, said mining companies would decide to stop developing the industry once government implements the new tax regime without engaging into discussions with the investors.

“If government says it wants to take so much from the mining companies through high taxes, then we can also decide to stop developing the industry and this will not be a good thing to do because what we need is a win-win situation,” Allen said.

He said mining companies were not in any way against the new taxes proposed by the government but were only in favour of a well-structured tax regime that would take into account the positions of the parties involved.

“It’s not that we don’t want to pay taxes but what we are saying is that the tax should be well structured. If the proposed tax is implemented, I am afraid there would be less re-investment in the mining sector,” Allen said. “Zambia needs re-investment for a robust economy.”

Earlier, Chamber of Mines general manager Frederick Bantubonse said the proposed mining tax regime would undermine sustainability of the industry and Zambia’s economy.

“We appreciate the need for the government to get more money from minerals. The Zambian government is entitled to formulating its own laws,” Bantubonse said. “Companies that are signatory to the development agreements (DAs) are willing to sit down with the government and negotiate. People should appreciate that mining is capital intensive and is a long-term venture full of ups and downs. We welcome a constructive and open dialogue with the government in order to arrive at a solution to collect mines for the state to run.”

And Scott said government’s tax proposals for the mining companies would pass without any amendment.

“The mines don’t have any representative in parliament and all the 150 MPs, the government and just ordinary citizens of Zambia are all for the idea that taxes should be increased,” Scott said.

He said he would personally lead demonstrations on the Copperbelt Province against mining companies once they take legal action after new taxes take effect in April.“The government heard the voices of people who wanted a fair share of resources. It is now time for the mines to pay taxes like others have been doing,” Scott said. “This is the time for the government to make hay while the sun shines when there is still a boom in copper prices on the international market.”

After a heated debate, expanded committee chairperson Geoffrey Beene, who is Itezhi-tezhi member of parliament, advised the mining companies to reorganize themselves and come up with actual proposals on what percentage increase they needed for the taxes. Beene said the mines should come up with proposals by tomorrow, giving parliamentarians only today to make consultations on the matter for presentation in parliament next week.

President Levy Mwanawasa and finance minister Ng’andu Magande have both indicated that the government would not allow for negotiations before the implementation of the new tax regime, which will see the mining companies contributing at least 47 per cent in taxes to the government treasury.

Effective April 1, 2008, mining companies will be expected to pay corporate tax at 30 per cent; mineral royalty rate on base metals at three per cent of gross value; withholding tax on interest, royalties, management fees and payments to affiliates or subcontractors in the sector at the rate of 15 per cent and a variable profit tax of up to 15 per cent on taxable income, which is above eight per cent of the gross income, will be introduced.

Labels: GUY SCOTT, JEREMY ALLEN, PF, WINDFALL TAX

posted by MrK @ 4:03 AM