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(STICKY) Magande describes windfall tax as paramount

Magande describes windfall tax as paramount
By Joseph Mwenda
Tue 30 Nov. 2010, 04:01 CAT

Magande: it is unfair for public officers to accuse people of being ‘ignorant’.

THE government’s reasoning on the challenges in administering the windfall tax does not justify the fiscal deficit in the mining sector, according to Ng’andu Magande.

Magande’s remarks come in the wake of commerce minister Felix Mutati’s statement that the windfall tax has its own challenges because it does not take into account the mines’ structural costs.

Magande, the former finance minister, said regardless of the cost structure of the mining company, the re-introduction of windfall tax was paramount because of the soaring copper prices.

“When a company wants to invest in the mines, they calculate the cash flow. So at the time they are investing, they know what their profit margins will be,” said Magande yesterday.

He said underground mines carried out pre-feasibility studies, which showed that they could still accrue enough revenue from their businesses despite the high production cost.

He said some mining companies were enjoying excess profits of over 220 per cent because of the high copper prices of over US$8,000 per tonne.

“The mine companies did not use that price in their feasibility study. They didn’t expect these prices. This is when you need to trigger the windfall tax,” he said.

Magande said it was unfair for public officers to accuse people of being ‘ignorant’.

“This is the second time that the minister of commerce is saying Zambians don’t understand. Why does he always want to believe that by being where he is, the rest of Zambians are ignorant?” he said.

Magande said it was not possible for all Zambians to become qualified ACCA accountants like Mutati and it was his duty to explain to the people who own the minerals how much return they were getting from the sector.

Labels: FELIX MUTATI, NG'ANDU MAGANDE, WINDFALL TAX

posted by MrK @ 5:53 PM