Friday, November 26, 2010

(STICKY) Musokotwane is being treacherous on windfall tax - Lawyer

Musokotwane is being treacherous on windfall tax - Lawyer
By Florence Bupe and Chiwoyu Sinyangwe
Fri 26 Nov. 2010, 04:01 CAT

LUSAKA lawyer Sibanze Simuchoba says finance minister Dr Situmbeko Musokotwane is being treacherous and unpatriotic by refusing to re-introduce windfall tax for mining companies.

In an interview, Simuchoba said it was surprising that the government, through the Ministry of Finance and National Planning, was adamant on the re-introduction of windfall tax for the mines despite pressure from various stakeholders to do so.

“It is hard to understand why Dr Musokotwane is coming out so strongly against the re-introduction of windfall tax when that is what Zambians want. In fact, I have not heard any mining company oppose windfall tax as strongly as Musokotwane and President Rupiah Banda,” he said.

Simuchoba said it was disappointing for learned people like Dr Musokotwane to gauge Zambia’s mining tax regime against countries like Chile because the ownership of the mining industry was different.

He explained that the bulk of Chilean copper mines were state-owned, and it would be unreasonable to apply certain taxes because this would mean the government taxing itself.

Simuchoba echoed other stakeholders’ concerns that Zambia would greatly lose out on attractive copper prices on the international market because the prices would not always remain high.

Copper is currently trading at over US $8,000 per tonne on the international commodities market.

But an economist advised the government to impose export tax rather than windfall tax, which he said was prone to manipulation.

Export tax responds only and when mines are exporting most of the natural resources, unlike windfall and variable profit tax, which aim to capture abnormal profits by mining firms.

Kelvin Kamayoyo supported calls early this week by US Ambassador to Zambia Mark Storella on the government to revise mineral taxation policies.

Kamayoyo said imposing export taxes on minerals would result in welfare gains and reduce the environmental adverse impacts of their extraction.

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