(STICKY) (PARLIAMENT ZAMBIA) ZAMBIAN PARLIAMENT DEBATES MASSIVE TAX EVASION BY FOREIGN OWNED MINES
COMMENT - The scandalous tax evasion by foreign mines is being debated in parliament. Thanks to Philippe for directing my attention to this post on Parliament's website.ZAMBIAN PARLIAMENT DEBATES MASSIVE TAX EVASION BY FOREIGN OWNED MINES
Wednesday, 13 October 2010
Debates- Wednesday, 29th September, 2010
Mr Simuusa: Madam Speaker, in my debate, I will concentrate on the mining sector because as the President said, it is the backbone of this nation.
However, before I do that, let me just briefly touch on the education sector. The issue of teachers’ houses is very serious. The Minister of Education, Hon. Dora Siliya, came to the Copperbelt and promised that the Government would build between 10,000 to 15,000 houses for teachers countrywide. Up to now, I have not seen any houses. That is a big issue in my constituency. Teachers live in deplorable conditions and are waiting to see these houses that the hon. Minister of Education promised.
Madam Speaker, I had hoped to hear a reference to that promise in the President’s Speech, but to no avail. I concur with my colleagues who also complained about this problem.
Madam Speaker, as regards the mining sector, on three occasions, the President, on page 11, spoke about increased production. He praised the Government on the increased production and claimed the glory.
Madam Speaker, in the recent past, I have seen this phenomena of boasting about how Zambia’s copper production is increasing and that by the year 2011, our production levels will have gone back to the levels of the 1990s. Why are we boasting about this increased production?
My colleague, the hon. Minister of Mines and Minerals Development has been boasting about how we are improving our production in the media. Whenever I hear that, I touch my head in embarrassment.
Laughter
Mr Simuusa: This is because I wonder why we boast about production which is not ours. That money is not ours.
Hon. Opposition Member: Yes!
Mr Simuusa: The Chinese and Indians can boast, but not us. We have allowed 100 per cent externalisation of all the mineral proceeds. When it comes to tax, we have said, over and over again, that we are not gaining any benefits from the mines.
The International Monetary Fund (IMF) told us point blank that we are not getting adequate revenue from the mines. They gave a figure of all the mining revenue that we are getting. Only 3 per cent is coming to the Zambians through Pay-As-You-Earn (PAYE). This is ridiculous, Madam Speaker.
Madam Speaker, I wonder where that boasting about increased production is coming from. I find that embarrassing because I liken it to the claims by some of our colleagues who have gone out of the country to the United States of America or United Kingdom. These colleagues, after acquiring a car or a microwave, start boasting that they are in Heaven as compared to the hell we are in back home. I ask them which hell?
Laughter
Mr Simuusa: Just because you go to the UK, use microwaves and eat Pizzas, you think you are in Heaven and start to boast? That is as annoying as it is embarrassing. Those people who belong to that country have developed their countries and the development belongs to them. People who boast about things in other countries should come back home and manufacture a microwave, and then properly say that they are living well because they have worked hard to achieve their status.
Therefore, Madam Speaker, if we want to boast about the increased production, as I have said before, the reckless policies of this Government must be reversed.
Madam Speaker, I was one of the people who were against the complete privatisation of the mines. I advocated that we retain one unit, the Nchanga Mine. That way, it would have competed with the Kansashi Mine, First Quantum Minerals and Fox Dodges. By working on a par with these mines, we would have assessed whether we can truly boast about increased production because, at least, that would have been our production.
Madam Speaker, one of the countries we use as a benchmark is Chile. It has declared about US$30 billion as revenue from mining. Of that US$30 billion, US$15 billion, which is 50 per cent, came from the National Copper Corporation of Chile (CODELCO). For those who can remember, CODELCO was one of the mines that wanted to buy Nchanga Mine during the privatisation period, but it is State-owned. It is a parastatal owned by the Government, but it contributed US$15 billion to its country’s tax revenue. Therefore, Chile can boast about increased production and that is what we are talking about.
Mr D. Mwila: Hear, hear!
Mr Simuusa: These are the policies that this Government should implement if it wants to boast about increased production. I challenge it, although it is too late because it is on its way out, ...
Laughter
Mr Simuusa: Anyway, let me challenge it. Maybe, in the few remaining months …
Laughter
Mr Simuusa: … it can start an operation whose production it will compare with mines such as the Konkola Copper Mine (KCM) because only then can it boast about increased production.
Madam Speaker, as it is, I join my colleagues in bemoaning the gross failure by this nation to acquire benefits from these mines because of its bad policies.
Madam Speaker, I will give you another example. If the Government wants to get benefits from the dividends, the vehicle that should be used is the Zambia Consolidated Copper Mine-Investment Holdings (ZCCM-IH). This is the vehicle that we have created to get dividends from all these mines in terms of share holdings. However, I have noticed that the ZCCM-IH has not produced annual reports for 2005 and 2006.
Madam, are we serious as a nation? This is gross incompetence. How can we, let a company that is supposed to be our watchdog and one that is supposed to be deriving benefit on our behalf not produce an annual report? This way, we do not even know our losses or profits? I would like the hon. Minister of Mines and Minerals Development to explain why that has been allowed. Why should we allow such a situation to prevail after it was said on the Floor of this House that if we are to benefit, the shareholding in the ZCCM-IH has to be increased?
Madam Speaker, Zambians only own 1.2 per cent shares in Lumwana Mine. Thus, there is no need to boast that. The Lumwana Mine, in the North-Western Province, will be the biggest mine in Africa, but we do not own it. Are we serious as a nation? I would like the hon. Minister of Mines and Minerals to state why we have not increased shareholding in the ZCCM-IH so that we get what is due to the nation.
Madam Speaker, the Government is good at boasting and claiming glory. As a result, there was so much talk about the US$18 million that Kansanshi Mine paid to the ZCCM-IH as dividends.
Madam Speaker, the accrued profits made by Kansanshi Mine, after taking care of all its accounts and expenses, was in excess of US$1.7 billion. Since, as a country, we only own 20 per cent shares in Kansanshi Mine, this works out in excess of US$350 million. The only amount of that US$350 million that came to the Government was US$18 million.
Mr Lubinda: Where is the rest?
Mr Simuusa: What happened to the rest?
Mr Lubinda: Bamalukula!
Mr Simuusa: That is what the hon. Minister of Mines and Minerals Development should be explaining to the nation. The Government should not boast about meaningless production.
Laughter
Mr Simuusa: Let the hon. Minister of Mines and Minerals Development tell the nation what happened to the rest of the money. The International Monetary Fund (IMF) also said that we are not collecting even the little tax that we are supposed to because we do not have the capacity. Those are the things that should be talked about.
When I was reading this Speech, I noticed that the President had talked about mining being the mainstay of the economy, but he did not talk about all these issues.
Madam Speaker, as regards tax collection, we are have under collected. The 3 per cent of Government revenue from the mines is only from PAYE and mineral royalties. Wait and see what will happen when this is increased to 6 per cent. At the moment, we are losing about K8.3 billion from under taxation of mineral royalties. Are we, therefore, going to collect this K8.3 billion by the end of the year? The answer is no and the reason is that we do not have the capacity. Our people are not competent enough to handle the sophisticated mine owners. Where are we heading as a country?
Madam Speaker, not only have we declared taxes that are too low, but also failed to collect it from the mines. Yet, we stand here boasting about production which is not even ours. This is why I am embarrassed to be a Zambian because, as a nation, we are not serious.
Madam Speaker, there has been talk about windfall tax versus variable profit. Having talked about the ZCCM-IH, how many companies declared profit? They must have been about eight with Kansanshi Mine being the only significant one as the rest either declared losses or very minimal profits from the time they took over.
Madam Speaker, since we insist on variable profit tax, but cannot handle simple mineral royalty, the challenge remains for the hon. Minister of Mines and Minerals Development or the hon. Minister of Finance and National Planning to tell us who has the capacity to collect this tax. Do they have the power to go through the books of these companies and question why there are losses? No, they do not. They do not have the capacity to deal with these sophisticated people who will continue reporting losses. Why then is there an insistence on variable profit tax when there is no profit being declared?
Madam Speaker, as a nation, how serious are we? I would like to challenge the hon. Minister of Mines and Minerals Development and the hon. Minister of Finance and National Planning to help me understand this. When I looked at the President’s Speech, I did not find where the President noted all these very important issues. When someone says that this speech is hollow, my colleagues on your right defend it. They say, “No, it was brilliant.” I am saying this speech is hollow because there are so many questions that beg answers. I am a genuine Zambian who is embarrassed by what is happening in this country.
Madam Speaker, even the people who are coming to take over these mines are laughing at us. They even say, “You people have a raw deal. You are sleepy.” As a Zambian, I am so embarrassed and would like the Government to really come out forcefully and give direction on this matter.
Madam Speaker, in the President’s Speech, what was said about mining only covered less than a page, and yet it is the mainstay of the economy of this country which is supposed to build the entire infrastructure. I call for more seriousness when handling such topics.
Madam Speaker, in concluding my debate, I would like to say that there are so many challenges that the people on the Copperbelt are facing. Having looked through the speech, the President did not mention anything about ex-miners’ benefits. There are miners who have not been paid for thirteen years, but he did not mention anything concerning that issue. At the moment, we have the former President, Dr Chiluba, whom I think is the ambassador now. He is the one dealing with ex-miners’ benefits now.
Interruptions
Mr Simuusa: Madam Speaker, assigning the former President to take up this task means that it is very important, but why did he not talk about it? What is his policy on this issue?
Laughter
Labels: GIVEN LUBINDA, PARLIAMENT, PF, WINDFALL TAX, WYLBUR SIMUUSA
posted by MrK @ 6:03 PM
2 Comments:
It is high time for zambian politicians to open their eyes on the reality of the zambian mine exploitation.
There is not enough money, even NO money at all for the country coming from their natural ressources.
Thanks to W. SIMUUSA who has pointed it out very clearly. Here is the beginning of a real understanding. It has to be followed
More on corporate tax evasion:
London Mining Network - Holding the mining industry to account
London Mining Network
Holding the mining industry to account
Vedanta in the frame for tax evasion
August 25, 2010
Around 160 multinationals profit from Mauritius’s status as a tax haven (Tax Justice Network) gives Mauritius an “opacity” rating of almost 100%), in order to walk away with billions in undeclared profits.
One of the worst of these is Vedanta Resource plc – Zambia’s biggest copper producer and among the wealthiest of UK mining companies.
Vedanta is majority-owned and controlled by Anil Agarwal and family, through a “trust” called Volcan Investments Ltd, which in turn wholly owns TwinStar Holding Ltd in Mauritius.
Four 100%-controlled Vedanta financial companies also operate out of the Channel Islands tax haven of Jersey.
See also: The London Mining Network
http://londonminingnetwork.org
Tax Justice Network
Vedanta in the frame for tax evasion
Posted on | August 25, 2010
Around 160 multinationals profit from Mauritius’s status as a tax haven (Tax Justice Network gives Mauritius an “opacity” rating of almost 100%), in order to walk away with billions in undeclared profits.
One of the worst of these is Vedanta Resource plc – Zambia’s biggest copper producer and among the wealthiest of UK mining companies.
Vedanta is majority-owned and controlled by Anil Agarwal and family, through a “trust” called Volcan Investments Ltd, which in turn wholly owns TwinStar Holding Ltd in Mauritius.
Four 100%-controlled Vedanta financial companies also operate out of the Channel Islands tax haven of Jersey.
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