Maravi

Caritas challenges govt to re-introduce windfall tax

COMMENT - This MMD government is taking too many bribes from the foreign miners to ever do anything that might reduce their profits. They are even giving back the dividend paid to ZCCM-IH by buying the dividend payers shares with it. The mines have no business being in foreign hands.

Caritas challenges govt to re-introduce windfall tax
By Kabanda Chulu in Kitwe
Thu 13 May 2010, 03:00 CAT

CARITAS Zambia yesterday challenged the government to reconsider re-introducing the windfall tax since it is a simpler way of benefiting from the mining industry. But mines minister Maxwell Mwale said re-introducing the windfall tax will threaten the future of the mining industry in the country.

And Australian Prime Minister Kevin Rudd has announced the introduction of a 40 per cent tax on mining profits starting in 2012 that will result in raising US $11.1 billion in its first two years.

Under its publish what you pay (PWYP) campaigns, Caritas Zambia stated that the government may improve the welfare of Zambians by increasing its resource base and using revenue collected to boost the social sectors.

“It is evident that as a nation, the main mover of the economy has been copper and for this reason government needs to reconsider its position on the windfall tax as being a disincentive to investment, on the contrary, this is one of the simplest ways of reaping benefits from the extracted copper which is likely to have high prices for the next two to three years,” it stated.

“This government has failed to predict the revenue that shall be collected from the mining sector under valuable profit tax but the windfall tax may allow us to make simple estimates of the expected revenue with the soaring price of copper because it triggers when the price of copper is US $5,512 per tonne and increases at different trigger prices, (it) is easy to calculate.”

Under the 2010 budget, finance minister Dr Situmbeko Musokotwane only projected K244 billion to be earned from mineral royalties but failed to project expected earnings from other taxes.

Caritas Zambia observed that mining of copper last year increased by 20 per cent but revenue collections dropped to US $77.7 million compared to US $128.4 million in 2008.

“This drop in revenue collected could have been cushioned by the windfall tax,” Caritas stated.

But Mwale argued that future prospects of mining lies in exploration and re-introducing the windfall taxes would threaten such activities.

“Others may not know what windfall taxes do to exploration and this is why we are happy with the decision the Australian government has taken to introduce super profit taxes which are like a windfall tax hence they will chase away investors to Africa,” said Mwale.

And Rudd stated that the 40 per cent tax on mining profits would help the government pay for additional hospitals, retirement benefits and company tax reductions.

“Australians had been shortchanged during a 10-year resources boom in which profits soared by US $81 billion but only US $10 billion flowed into national coffers,” stated Rudd. “BHP is 40 per cent foreign owned, Rio Tinto is more than 70 per cent foreign owned, that means that these massively increased profits built on Australian resources, are mostly in fact going overseas.”

Labels: CARITAS, CORRUPTION, MAXWELL MWALE, WINDFALL TAX

posted by MrK @ 4:12 PM