(LUSAKATIMES) State reveals reason for the abolition of windfall tax

COMMENT - He forgot how to mention how much money he was paid not to tax the mines.

State reveals reason for the abolition of windfall tax
Saturday, May 8, 2010, 9:09

A Government official has revealed the underlying reason behind Government’s decision to scrap off the windfall tax in the mining sector.

Deputy Minister in the ministry of Mines, Boniface Nkata says if Government had continued to charge windfall tax on excess profits in the mining sector amid the Global financial crisis the affairs of the country would have become ungovernable.

He said the pulling out of most foreign mining firms from the mines created a lot of job losses which created tension in the country which, he stressed, was almost going to lead to a vote of no confidence by the Zambians in the incumbent Government.

In an overheard conversation with fellow government official, Mr Nkhata explained that government had predicted a situation where people would have been up against government because of the loss of jobs and thereby advantaging the opposition over the ruling party.

[So non-taxation of the mines, in effect Zambian poverty, comes down to political expediency? - MrK]

He said that the opposition parties had also contributed to inciting people to rise against Government.

He said that Government feared a situation where an early election would be called because of failure by Government to Govern the Country through its strategic revenue earner the mines.

Mr Nkhata said that after the abolition of the windfall tax, Government has been able to restore jobs that were lost following the closure of most mines.

He added that the issue of windfall tax raises so much dust and disturbances in the Governance of the country and that Government would not consider re-introducing it.

QFM