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(STICKY) Govt’s failure to collect taxes from the mines is a scandal – Dr Mphande

Govt’s failure to collect taxes from the mines is a scandal – Dr Mphande
By Salim Dawood
Fri 17 Sep. 2010, 04:01 CAT

UNIVERSITY of Zambia economics lecturer, Dr Mathias Mpande has charged that it is a great scandal by the Zambian government to fail to collect what is due to the nation in terms of taxes from the mining sector.

And Dr Mphande, a former deputy mines minister, has said Zambia Revenue Authority (ZRA) will not recover the K 8.3 billion mining royalties’ deficit by the end of the year because it has no competent staff to handle the mines.

In an interview with Post Online over ZRA’s revelation that there was an K8.3 billion deficit in mineral royalties collection which it said will recover by the end of the year, Dr Mpande said it would impossible for ZRA to recover the K8.3 billion deficit in mineral collection royalties by the end of the year.

He said the deficit was because the mining companies were not paying as much royalties as they were supposed to pay.

“The mining companies as far as am concerned are transfer pricing, there is also rampant tax evasion and ZRA are not up to the mark to audit the mining companies’ books so that they can have a realistic assessment of what is due,” he said.

“ZRA has just got to be capacitated and employ competent people who are competent in mining taxation. The current people they are employing people who have probably just done administration and economics.”

Dr Mphande said ZRA should employ people who have basic understanding of the mining industry so they could competently deal with issues of tax in the industry.
He said studies in economics and administration were not sufficient for ZRA staff to asses what the mining companies were doing.

“They (ZRA) should employ people who are competent from mining areas as well and train them into accountancy and taxation,” Dr Mphande suggested.

He observed that ZRA officials would not understand how mining companies generate their revenue and how they conceal their costs.

And Dr Mpande has also observed that government was under taxing mining companies describing the situation as scandalous.

He said the government was doing the country a disservice by covering the mining companies from paying the appropriate tax.

“That is a scandal as far as am concerned, the Zambian government is not doing the country a service, we are not getting what is due from our resources and that I have said on several occasions and that is true and it is increasingly getting worse,” he said.

He said the Zambian mining industry was the only industry that was large enough for the country to get revenue that would meaningfully contribute to tangible economic growth and development.

“Now if you have a government or administration that insulates the mining industry for a successive period of 10 to 15 years as if it’s a golden egg, where else can GRZ get money?” Dr Mpande questioned.

He said government was instead stifling business prospects for Zambians that were in business.

“Now they are stifling people who are brewing Chibuku and people who are making soft drinks that’s where they go and get the money (taxes)… they are even getting money from companies that are producing food like mealie meal, that is not good,” he said.

Dr Mphande said the situation was caused by lack of understanding of how an economy would grow from the utilization of its country’s resources.

He said the Zambian economy was mine based and it was largely through mining that the country’s economy could grow and facilitate development.

He said the low tax that government had allowed the mining companies was encouraging the mining companies to continue “abstaining” from what they were supposed to do.
“They are supposed to upgrade minerals and add value but as a consequence of this government is not adding value,” he said.

Dr Mphande said the level that the of skills and development the country had gotten to, Zambia should have been exporting not less than copper cables, transformers and other finished products.

“Its not possible (for ZRA to recover the K8.3 billion deficit), the mining companies are contributing negatively to the country’s revenue, instead of paying, they sometimes get refunded via VAT (Value Added Tax), a situation that they don’t even contribute, somebody who doesn’t pay tax gets money from you, can you see that as sensible? That is what is happening to ZRA,” said Dr Mphande.

Labels: CORRUPTION, MATHIAS MPHANDE, MINING, WINDFALL TAX

posted by MrK @ 5:21 AM