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ZRA chief defends Musokotwane on abolishment of windfall tax

ZRA chief defends Musokotwane on abolishment of windfall tax
Written by Chiwoyu Sinyangwe
Tuesday, August 25, 2009 3:57:41 PM

ZAMBIA Revenue Authority (ZRA) commissioner general Chriticles Mwansa has said the abolishment of the windfall tax cannot be blamed on finance minister Dr Situmbeko Musokotwane as it was cabinet's collective responsibility. And Mwansa has confirmed that the country's tax revenue earnings had reduced by about 25 per cent owing to reduced economic activity.

During the Ministry of Finance sponsored programme 'Cultural Remodeling', Mwansa said the 2009 new tax regime which saw the abolishment of the popular windfall tax was a responsibility of the entire government system.

"I want to believe that it is not about who is minister of finance. The policy that governs taxation is a government policy and it could have been Mr Mwansa in the seat as minister of finance...," Mwansa said.

"Hon Musokotwane today is a Minister of Finance, he did not make the decision alone. He got the government policy and he then gave it to the people that deal with issues of taxation..."

Mwansa said the government wanted to have a tax system that ensured stability and predictability for the country's lifeblood.

"What the government wants is a system that is predictable and the system that is fair, the system that gives the government what is due to government and the systems that give the [mining] companies to work and flourish in order to continue to give us the tax," Mwansa said.

He defended the abolishment of the 2008 mining fiscal regime, saying this year's tax system was a revision and that the ultimate objective was to perfect the existing structure.

Mwansa further said ZRA had invested a lot in training manpower to build capacity to be able to audit the huge multinational companies.

This year, following pressure from the foreign mining companies on account of collapsed copper prices owing to the secondary effects of the global economic crisis, the current government abolished the 2008 tax regime which was introduced at the height of the boom in copper prices by late president Levy Mwanawasaís administration after widespread pressure, especially from the urban elite who contended that mining companies were reaping super-normal profits at the expense of the country.

The windfall tax was designed to match rises in the price of copper: it was set at 25 percent while copper sold for US $2.50 per pound, 50 percent for the next 50 cents and increased to 75 per cent when copper fetched above US $3.50 per pound.

With the current copper price of around US $6, 100 per tonne, the windfall tax could have triggered as the price translated into US $2.70 per pound. This situation has already triggered calls for the restoration of the windfall tax.

And Mwansa said the country experienced reduced earnings, especially in trade taxes as most giant global economies went into recession.

"There has been a reduction in the performance of various tax types this year compared to last year. We saw the world economy going into a recessionÖmost of the trade is done with these economies,î said Mwansa.

"We have seen a 20 per cent reduction in trade taxes whose activities is captured through our entry points where imports have reduced by the same magnitude of 20 to 25 per cent."

Labels: CHRITICLES MWANSA, SITUMBEKO MUSOKOTWANE, WINDFALL TAX, ZRA

posted by MrK @ 2:59 PM