(STICKY) Prof Saasa urges govt to revist mining revenue policy
Prof Saasa urges govt to revist mining revenue policyBy Kabanda Chulu and Chiwoyu Sinyangwe
Thu 07 Jan. 2010, 04:01 CAT
PRICEWATERHOUSE Coopers(PwC) and the World Bank have revealed that tax reform has remained on the agenda of several governments, including Zambia, despite the global economic recession that has resulted in reduced tax revenues and difficult tax policy choices.
And economic consultant Professor Oliver Saasa has asked the government to quickly revisit its revenue policy for the mining sector as benefits of the recovering copper prices are only accruing to mining companies
According to a joint report titled ‘Paying taxes 2010: the global picture’, many governments have streamlined the business tax regime and simplified the tax administration in order to cope with challenges posed by the global economic recession.
The report measured the ease of paying taxes across 183 economies by assessing the administrative burden for companies to comply with tax regulations and also by calculating companies’ total tax liability as a percentage of pre-tax profits.
“While 20 economies have reduced corporate income tax rates, 18 simplified the process of paying taxes. On average across all of the 183 economies covered in the report, the standard case study company measured has to make 31 tax payments and spend 286 hours on calculating and paying its taxes,” it stated.
“These results show that corporate income tax is just one of the taxes with which business must comply. On average, the company pays 9.5 different taxes and corporate income taxes accounts for 12 per cent of payments, 26 per cent of the time to comply and 38 per cent of the tax cost.”
Commenting on the report, World Bank director of the Global Indicators and Analysis Department Penelope Brook stated that many governments’ efforts to streamline tax procedures and reducing time spent on compliance would make a difference for small and medium enterprises especially in difficult times.
And PwC Africa Tax leader David Tarimo stated that the global recession had meant falling tax revenues and difficult tax policy choices.
“The challenge is ensuring sufficient public revenues for the future while incentivizing investment and economic growth,” stated Tarimo.
Meanwhile, pressure continues to mount on the government to reintroduce the abolished windfall tax as copper prices continue to show signs of resurgence in tandem with the recovery of the global economy.
Copper prices on the international market continue to remain robust, closing yesterday on another strong run with three-month copper on the London Metal Exchange trading around US $7,505 a tonne.
Commenting on the current high copper prices, Prof Saasa predicted a further rise in copper price, saying this would only benefit mining companies at the expense of the country.
Prof Saasa said it was incumbent upon any responsible government to ensure that any benefits that accrued in its most important sectors such as mining benefited the country through improved cash flows into the Treasury.
Prof Saasa predicted that copper prices would hit an all time high of almost US $9, 000 a tonne by the end of this year, rallying on the recovering global economy.
“It’s very clear that this is straight forward that the global stabilising and demand for commodities like copper is rebounding, and in fact I am hoping that it is going to go beyond US $8,000, US $9,000 per tonne,” Prof Saasa said.
“This current price places good state those opposing government reluctance to revisit revenue earnings from the mining sector…even this excitement about the high copper prices is only accruing to the mining companies. They are the ones feeling the benefit because with the higher the price, the higher they (mining companies) maximise the profit benefits and very little true accrue to our treasury.”
He said the windfall tax was the surest way of ensuring the country benefited astronomic rises in the red metal because most of other tax structures were embedded in the long-term agreements the government entered into with mining companies.
Prof Saasa said while broader tax increments maybe debatable because of the long-term agreements, windfall tax was the only tax that ensured that both the government and mining companies benefited from boom in copper price.
“Even the IMF (International Monetary Fund) is projecting further rise in copper prices and ideally, any responsible government would ensure that improvement in international copper prices leads to improvements in terms of treasury collection from an important sector like mining which is our country’s largest foreign exchange earner,” said Prof Saasa.
“Copper prices are surely destined to hit the highest level, but we should not allow these benefits not to accrue to the country. I think there is need to put the interest of Zambians in this excitement about the rising copper price.”
Labels: MINING, OLIVER SAASA, TAXATION, WINDFALL TAX, World Bank
posted by MrK @ 4:21 AM
1 Comments:
Foreign groups have to accept that the mines give dividends to ZCCM-IH !
The best example is FIrst Quantum Minerals and KAnsanshi Mining !
In the last four years, KAnsanshi Mining had more than 2 billion of US$ benefit after amortization.
But, ZCCM-IH with its 20 % in the mine, received only 3 M US$ in dividends !!
Why ZCCM-IH and GRZ never talk about this scandalous situation ??
The same situation with all the ZCCM-IH's assets !!
In the last four years the total benefits for ZCCM-IH is between 600 and 800 MUS$... but receive 6.7 M US$ in dividends !!
The day where foreign groups will accept to give dividends to ZCCM-IH, Zambia will be better !
But the best solution is to take 51 % in all mines with ZCCM-IH.. and the dividends will be there every years..
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