Maravi

Economist expresses skepticism about findings in govt audit of mines

Economist expresses skepticism about findings in govt audit of mines
By Chiwoyu Sinyangwe
Wed 21 July 2010, 15:00 CAT

GOVERNMENT’S plan to conduct a special audit of the mining sector to determine their earnings and punish erring firms found cheating will yield nothing, United Kingdom-based economist Chola Mukanga.

Reacting to an announcement by finance minister Dr Situmbeko Musokotwane that the government plans to conduct an audit of mining companies to determine their earnings and punish companies found cheating over declaration of profits, Mukanga doubted if any single company would be found at fault.

“I don't think this audit will yield anything because multi-national companies are experts in this area and I doubt if any single company would be found at fault,” Mukanga said.

“Even if Dr Musokotwane were to find any mining company at fault, I doubt he has the ability nor the will to punish anyone. These cases take years to go through courts and the threat to mining companies is just not credible. Let us not forget that there's still the little problem of the windfall revenue which mining companies have refused to pay. Now if a company can owe tax revenues to government and fails to pay, what hope is there that a government can actually punish it for complicated accounting processes?”

Mukanga accused the government of favouring foreign firms at the expense of local enterprises.

“Can you imagine if an ordinary Zambian refused to pay his tax? Let us also not forget that this is the same Executive Branch that has failed to take the report of the Auditor General seriously. People, let us be serious and start looking at issues with objective assessment,” he said.

And Mukanga dismissed an assertion by Dr Musokotwane that the abolished windfall tax was punitive to mining firms.

Mukanga said Dr Musokotwane was entangling himself in too many issues he would not handle instead of working to resolve the problems regarding taxing the country’s mainstay.

“Who said the point of imposing windfall tax was about punishing offenders? The reason for the windfall tax is to benefit Zambians period and ensure some guarantee of revenue when prices are above a certain threshold,” said Mukanga.

“The issue of cheating only becomes relevant when Dr Musokotwane argues that the profit variable tax does the same job. That is when all well-meaning Zambians rightly question that logic given the underlying incentive for mining companies to cheat. Do you see how our finance minister Musokotwane is getting the very elementary policy questions confused? He is inventing a problem that is not central to the original argument, and then he proceeds to argue with himself. This is poor analytical thinking.”

Labels: CHOLA MUKANGA, SITUMBEKO MUSOKOTWANE, WINDFALL TAX

posted by MrK @ 11:39 AM