Maravi

‘Windfall tax abolition was done to save mining sector’

COMMENT - This minister's response is an insult to any thinking person's intelligence. With an annual profit of $2.4 billion and over, and the creation of a mere 58,000 jobs (Zambia has a labour force of 5 million), we are paying foreign mining companies $41,000 for every job 'they create'. In other words, we could be creating 8 jobs and pay every worker $6,000 a year ($500 per month), for all the money WE are PAYING THE MINES. The mining sector does not exist to create jobs, it exists to create capital for our economy, so we can diversify into agriculture, manufacturing and infrastructure, which is where jobs are really created. Right now, all that is happening is that foreign mining companies are lining their own pockets. And the MMD are defending them, not the Zambian taxpayer.

‘Windfall tax abolition was done to save mining sector’
By Edwin Mbulo in Livingstone
Sun 07 Feb. 2010, 04:00 CAT

THE abolition of the windfall tax last year was done to save the mining sector, mines and minerals development minister Maxwell Mwale has said.

Reacting to Luena independent member of parliament Charles Milupi who said Zambia had lost an estimated US $600 million in mine tax revenues following the government’s abolition of the windfall tax last year, Mwale said the MMD government had taken a decisive decision to safeguard job losses in the mining sector.

“We had to maximise the benefits. It is either we got an instant gratification from the windfall tax and make US $600 million as he says or we see a decline in the mining sector. The key issue is that with windfall tax you kill exploration. So with no discoveries there would be no developments in the mining sector, we had to take a long-term view of the industry,” said Mwale in an interview on the sidelines of the 5th Africa Mining Congress at the Zambezi Sun Hotel on Saturday.

Mwale said President Rupiah Banda’s government had taken a long-term measure and was mindful of the historic happenings in the mining sector.

“With job security in the mining sector we mitigate poverty. Imagine that apart from Nkana mine, also Luanshya, Mufulira closing down. There would have been a total social chaos on the Copperbelt. So we made sure that the industry remained secure and vibrant again,” Mwale said.

He charged that Milupi was just politicking over the issue and he did not know how he arrived at the US $600 million loss.

“We need to have a bigger picture of the mining sector because we are not the only ones who want investors to come. You have seen for yourself here it is not only us, Europe also wants mining investors. We are not an island. Some companies go to DRC, which has 10 per cent copper. Why invest in Zambia? It is because of the peaceful and safe political climate that we have all because of President Rupiah Banda’s administration. So let us not just politic for the sake of it,” Mwale said.

Milupi, who is also former chairperson of the parliamentary public accounts committee (PAC) was commenting on revelations by President Banda to World Bank president Robert Zoellick that Zambia was trying to seek higher interest loan facilities from the Breton Wood Institute to finance the repair of roads damaged by mining activities in the country.

President Banda said Zambia was considering borrowing from the International Bank for Reconstruction and Development (IBRD) window for financing crucial infrastructural projects.

Borrowing from IBRD, a non-concessional window, attracts interest rates of between three to three and half percent while disbursement of the International Development Association (IDA) window is done through grants and soft loans.

Milupi said if the country had maintained that popular windfall tax, the treasury coffers would have been boosted without borrowing from the World Bank.

Labels: MAXWELL MWALE, WINDFALL TAX

posted by MrK @ 3:16 PM