Maravi

Zambia still has windfall tax, says Musokotwane

COMMENT - The minister should resign for uttering such complete BS. The very point about taxing revenues is that they are much more easily checked than 'profits', which can and are being fudged. Hence, according to this article, a collection of $77 million in taxes over $2900 million in revenues. (Revenues are a lot higher than that, and on top of that, there is the uranium and gold which are being kept off the books.) The minister is hoping people don't know the difference between profits (revenues minus costs and minus tax deductions) and revenues (tonnes of copper x copper price). Revenues are easily checked (and therefore tax easily collected) and profits are open to interpretation - which is why the mines pay only $77 million. The minister knows that, just as he knows that as a (former) non-executive director at ZCCM-IH that ZCCM-IH is barely receiving any dividends from it's shareholdings. This is pure and utter corruption. And it is illegal.

Zambia still has windfall tax, says Musokotwane
By Chiwoyu Sinyangwe
Mon 24 May 2010, 04:01 CAT

FINANCE minister Dr Situmbeko Musokotwane has insisted that Zambia still has a windfall tax regime to cater for abnormal taxes by mining companies. Dr Musokotwane said the government did not abolish the windfall tax as outlined in the 2008 mining fiscal regime but only refined it to align the tax to profit being made by mining companies and not revenues.

“When you tax the revenue and not the profit, you are basically closing the mines,” Dr Musokotwane said during the recording of the Ministry of Finance public relations programme, Cultural Remodeling last Saturday.

“Indeed this country still has windfall tax but windfall tax on profits which is called variable income tax. What we rejected was windfall tax on revenues.”

Dr Musokotwane said Zambia was one of the few mining countries that had a windfall tax on abnormal profits made by mining companies.

He cited Angola, Burkina Faso, Botswana, Canada, Chile, Democratic Republic of Congo, Ghana, Kenya, Malawi, Namibia, Sierra Leone, South Africa and Zimbabwe as the country that did not have a windfall tax regime while Zambia and Botswana were some of the countries that maintained the tax aimed to capture abnormal earnings by mining firms.

“Even Australia which introduced windfall tax on profits and not revenue, you have seen the outcry there…a lot of projects are being…investors are leaving Australia and going to other areas like Africa.”

Dr Musokotwane said maintaining the windfall tax of 2008 would have led to chaos and social unrest on the Copperbelt and most key mines would have closed.

“Mopani Copper Mines would have closed, KCM Konkola Copper Mines would not have completed their expansion programme…do you imagine the social unrest and chaos that would have been on the Copperbelt?” he asked. “We need to be a little patient and in the next three to four years, mining taxes will be contributing one third of our GDP Gross Domestic Product.”

Last year, Zambia earned US$77 million in mine taxes to the Treasury from total export revenues of US$2.9 billion worth of copper.

Labels: BULLSHIT, SITUMBEKO MUSOKOTWANE, WINDFALL TAX

posted by MrK @ 2:58 PM