Thursday, March 04, 2010

IMF joins calls to raise mine taxes

IMF joins calls to raise mine taxes
By Chiwoyu Sinyangwe
Thu 04 Mar. 2010, 04:30 CAT

THE International Monetary Fund (IMF) has joined calls on the government to raise mine taxes in view of the rising copper prices in the aftermath of the global economic crisis.

The IMF staff mission that visited Zambia from February 17 to March 2, 2010 said there was need to raise taxes from the country’s economic stay to fund infrastructural projects and social sectors.

The IMF observed that although the local economy maintains an appropriate supportive stance, the main risks in the period ahead include possible adverse development in world copper and oil prices, and aid flows.

“Looking forward, the key challenge will be to create fiscal space to allow for an increase in priority expenditures, while preserving macroeconomic stability and debt sustainability,” George Tsibouris, head of an IMF staff mission stated after completing its inspection of the country’s economic policies.

“Enhanced tax collections, including from the mining sector will be critical for providing space for increased capital and social spending.”

Last year at the height of the crisis, the government lifted the windfall tax after some foreign investors threatened to take legal action, accusing authorities of breaching agreements they signed with the mining companies that promised lower taxes.

Tsibouris urged the government not to give civil servants high wage increases and also spoke against the fuel subsidies.

“This will also require measures to enhance the efficiency of current spending, to ensure that the wage bill does not end up displacing other high priority needs, and to avoid subsidizing fuel products,” said Tsibouris.

“The continued implementation of the multi-year tariff adjustment framework should help ensure sustainable and reliable electricity supply in the years ahead.”

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