Musokotwane labours to win audience over windfall tax
COMMENT - More arrogance and adamancy of the Minister. There is only one reason not to tax the mining companies, and that is corruption. Dr. Musokotwane, during his stint as non-executive director of ZCCM-IH, did not manage to collect one cent in dividend payments, even though foreign mining companies owe hundreds of millions a year in dividend payments to ZCCM-IH. Now he is the finance minister, he is shielding them from paying a billion a year taxation. At best, he is a fool who has lost any credibility, at worst, he himself is deeply corrupt. Japan did not develop because it "attracted as many investments as possible". That is complete nonsense. Domestic producers in Japan are heavily protected from foreign competition. There are no US, German or Italian car manufacturers in Japan. In all of East, South and Southeast Asia, government owned businesses dominate the economy. Japan and Korea's Keiretsu and Chaebol are heavily government supported. The difference between Asia and Africa, is that in Asia, the economy is owned by Asians, while in Africa it is owned by Europeans, Americans, and Australians, and now Indians and Chinese. That is why Zambia is not benefiting from foreign investment, and you don't even need a PhD to know and understand that you do not benefit to any great degree from businesses you do not own.Musokotwane labours to win audience over windfall tax
By Chiwoyu Sinyangwe and Salim Dawood
Sun 07 Nov. 2010, 04:01 CAT
FINANCE minister Dr Situmbeko Musokotwane on Friday night said people pressuring the government to raise taxation from the mining sector to enable the country benefit from current copper boom are preaching economics of the 1960s.
And veteran mineral economist Dr Mathias Mpande said there is need for the country to transform and reposition itself by focusing on attracting quality investments which should be taxed to benefit everyone.
During the Christian Council of Zambia (CCZ) and Press Freedom Committee of The Post (PFC) organised public discussion at Golden Bridge Hotel, ordinary citizens took Dr Musokotwane to task on why the government was under-taxing foreign investors in the mining sector.
The mining sector, the country’s economic mainstay contributes 9.7 per cent to the country’s gross domestic product (GDP), about 80 per cent of the foreign exchange earnings, while tax revenues to the Treasury stands at a paltry one per cent.
Dr Musokotwane was seemingly irked by the number of people who denounced the government taxation policy on the mining sector and perceived favouritism of the mining firms at the expense of economic benefit to the country.
He said increasing taxation of the mining sector higher than what the government had given would kill the mining sector.
“I have earned no applause…I would actually be very happy to walk out of here without an applause but having imparted something important to you and I believe in the deepest of my heart, with the deepest of conviction with all I have been studying and teaching economics, applause or no applause what I have been telling you is the future of this country,” Dr Musokotwane said.
“I know you disagree. There is internet, please invest time into what’s happening in the world. When I listen to many of you speak, I realise that unfortunately and I apologise, we have lost you behind because you don’t know what has created development and what has made countries to lag behind.”
Dr Musokotwane said debating that foreign investors were responsible for the current economic woes in the country owing to their low contribution to the country’s economic basket was outdated.
“When I listen to many of you, it reminds me of the discussion of 1960s. When I listen to you…the debate in the 1960s is precisely what I am hearing today,” he said.
“‘…foreign investors are exploiting us, they are making us suffer and many African countries including Zambia cast exactly the direction we went. We don’t want investments, they are troubling us, they are making us suffer.’ That is exactly what we did. Asian countries - the likes of Taiwan, Singapore, Hong Kong, Philippines - took a complete opposite view of that. They attracted as many investments as possible. They had lower and stable taxes. Today, where are we? We are still fighting poverty, the Asian countries have moved on. So, when I hear so many of you saying we don’t want investors, we don’t want foreigners, be open-minded, take time to study. If you don’t do that, you are going to regret it.”
Dr Muskokotwane said there was need for Zambians calling for increased mining taxes to read widely and research on countries that were prospering.
“I have been an economist since 1979, reading books, working in other countries. Please take it from me, I am appealing to your hearts, this attitude you have is completely wrong,” said Dr Muskokotwane.
“You can laugh, you can insult me, you are free…If you are going to be like those Chinese, the Indonesians, you have to change your thinking. But I think some day, some of you are going to appreciate this.”
But Dr Mpande said Zambia needed to start attracting investments that need to boost industrialisation rather than continuing to boost copper output.
Dr Mpande explained that as most copper producing countries like Zambia and Democratic Republic of Congo ramp up output in view of the current high metal prices, copper prices were likely to fall from the current record highs of over US $8,500 per tonne.
He disagreed with assertions by Dr Musokotwane that most Zambians were against foreign direct investors.
“We need investments and we need a lot of investments. But we need the investments that the Taiwanese, Koreans, Japanese and Chinese…most of the Germany Mercedes Benz, VW are made in China,” Dr Mpande said. “We want to make transformers here.”
Dr Mpande explained that tax breaks given to mining firms only benefitted the firms' countries of origin.
“We need investments from all sources. We need quality which we shall tax and benefit and everybody else in the world wants to pay tax, including Chinese. If you don’t tax them here, they will be taxed in China,” said Dr Mpande.
Labels: CCZ, MATHIAS MPANDE, NEOLIBERALISM, SITUMBEKO MUSOKOTWANE, WINDFALL TAX
posted by MrK @ 4:47 PM
3 Comments:
no dividends for zccm while in the same time the benefits for zccm are more than 800 MUS$..
the next ten years, when the mine will be empty...it will be too late for receive dividends...
where is the money ?
who receive this money ?
in mauritius ?
"Asian countries have moved along". I agree with this statement. When you see the statistics for the past 20 years, you will realize these countries growth rates. I personally feel that African countries and its people are still not exposed to investing. Plus the crime rates have increased. Poverty is another cause ( but not the major cause).
Africa is a continent which has lots of diversities and people must come here and invest..
Foreign investors
Parag,
Zambia and Africa staying behind Asia has nothing to do with being 'still not exposed to invest', or crime rates.
It has to do with the fact that Asians own their own economies, while the Zambian economies are still owned by the British, Americans, Canadians, Australians, and now Chinese and Indians.
There is no mystery there. The Asian countries protected their own corporations and gave them massive state support. The African countries have been under the heel of the IMF and World Bank, which have sucked the lifeblood out of their economies, through the demand for neoliberal economic policies since the fall of the Berlin Wall in 1989.
The IMF and WB insisted on multi-party democracy in Zambia, and connected all kinds of neoliberal policies to any kind of financial support - just as they did in South and Central America.
I think they have allowed Asia to develop to give a counterweight to China/North Korea/Vietnam and Communism.
Anyway, it is not a mystery why African economies are not developing, when they are owned by western corporations. The profits move abroad and are not reinvested in their economy.
More foreign investment will only make the situation worse.
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