Maravi

(STEEL GURU) Zambia may over shoo ax collection target for 2010 on mining bonanza

Zambia may over shoot tax collection target for 2010 on mining bonanza
Sunday, 02 Jan 2011

Zambia envisions realizing more than 9% of the total revenue projected in 2010 because of increased tax collections from mining companies and other domestic taxes, which it may plough into other commitments including ensuring food security.

Finance minister Dr Situmbeko Musokotwane, in his letter of intent to global lender International Monetary Fund managing Director Mr Dominique Strauss Khan said that it was government’s projection that revenue collection this year would exceed nine percent projected because the country has performed well, given the fiscal and monetary policies implemented by government to grow the economy.

The performance is attributed to higher collections under income and value added taxes arising from tax arrears and an increase in tax collections from mining companies. Following the maize output of 2.7 million tones during the 2009/10 season, the highest in more than two decades, the government has set aside more than USD 250 million (ZMK 1.3 trillion) to purchase the grain.

The expenditure which was not budgeted for and accounted for about 1.7% of the country’s economic growth is said to have put pressure on the national budget for this year. The Food Reserve Agency, the grain storage and purchase wing of the government, intends to sell the bulk of the grain, particularly maize to deficit countries in the region and beyond in 2011 and thereafter, repay the government.

He said the government decided to increase its expenditure outside the planned fiscal year 2010 to prevent the grain from going to waste by remaining unsheltered in the fields with the onset of the rains in the country.

Dr Musokotwane added that government would secure more than USD 100 million from the mine tax arrears to finance the purchase of the maize and borrow a further USD 100 million from lending institutions through government securities including treasury bills and bonds.

Foreign mining companies, he said agreed to pay USD 1.3 million (ZMK1.4 trillion) in tax arrears arising from the 2008 mining tax regime as the signed 1 year mine stabilization tax agreements. The government reiterated its unwillingness to re introduce the windfall tax regime, waived in 2009, adding that the current taxes at play were adequate to ensure that enough revenue was generated from the mines to compliment the economic growth program.

The Lusaka-based Bank of Zambia, the country’s reserve bank, was currently working out modalities of mopping excess liquidity from the market so that the high fiscal expenditure on maize purchases does not fuel inflation, from the current single digit of about 7.1% at the end of November this year and the projected economic growth of more than six percent of Gross Domestic Product during the fiscal year, 2010.

(Filed by Mr Kapembwa Sinkamba SteelGuru Correspondent Zambia)

Labels: COPPER, FRA, MAIZE, SITUMBEKO MUSOKOTWANE, TAXATION, WINDFALL TAX

posted by MrK @ 7:48 PM