Maravi

Letters - Mutati on Windfall Tax

Mutati on Windfall Tax
By Kabwe
Sat 04 Dec. 2010, 04:00 CAT

Editor,

Allow me to express my disappointment with Honorable Felix Mutati.
Honourable Mutati is being untruthful.

He is attempting to mystify the concept of windfall taxation and thereby confuses the public into believing that it is beyond their level of comprehension. It is very depressing to hear senior leaders failing to provide guidance over such pertinent issues.

From the look of things, it appears that either Mutati and Dr Situmbeko Musokotwane have not fully comprehended the mathematics of windfall tax or they are blindly implementing their master President Rupiah Banda’s directive.

Unfortunately, instead of saying so, they have resorted to insulting the general public by suggesting that we do not understand the meaning of windfall tax.

Mr Mutati sir, we understand what windfall tax is. It is a tax that governments levy on certain industries (mostly privatised) when economic conditions allow those industries to experience above-average profits.

Windfall taxes are primarily levied on companies in the targeted industry that have benefited the most from the economic windfall.

Zambians are aware of the changing trends in the copper prices on the international market.

That’s why they are calling for the re-introduction of the tax. If at one time the cost of copper per tonne is US$3000 and at another instance it swells to US$8000 one does not need complex financial analytical skills to deduce that the company in question is enjoying excess profits.

Can the minister explain how taxing a company that has amassed excess profits result into the demise of that company?

It is very difficult today for any sane person to appreciate that there is any benefit privatisation has brought to the Copperbelt towns. Look at street roads in Kitwe, Chingola, Mufulira, Luanshya and others.

When you walk through those once nicely tarred roads today, nearly everywhere you step, you encounter large potholes. Social amenities and welfare societies that once characterised these towns are no more.

The only near-good roads you see are in the town centre.

To hear a minister declaring that we do not need this windfall tax under such conditions is indeed disappointing.

Minister Mutati is one among few MMD leaders who command considerable respect from the general public. But to hear him make such pronouncements is a big setback.

Kabwe, Lusaka

Labels: FELIX MUTATI, ROADS, WINDFALL TAX

posted by MrK @ 6:18 PM