(STICKY) Windfall tax re-introduction meaningless without transparency - MUZ

Windfall tax re-introduction meaningless without transparency - MUZ
By Florence Bupe and Kabanda Chulu
Sat 05 Feb. 2011, 04:00 CAT

ZAMBIANS should demand transparency from government in the use of revenue from the mining industry before pushing for the re-introduction of the windfall tax. And the Council of Churches in Zambia (CCZ) says government must develop a policy framework to compel investors to deposit 50 per cent of their profits in local banks to strengthen the foreign exchange reserve bases.

Making a submission to the parliamentary committee on economic affairs on the impact of extractive industries on Zambia’s economy in the post privatisation era, Mine Workers Union of Zambia (MUZ) deputy secretary general Nkole Chishimba said the re-introduction of windfall tax would be meaningless without transparency.

He said the government should clearly explain how resources from the mining industry are being utilised.

“Before we ask for the re-instatement of windfall tax, it is important to ask how the money we are currently getting (in form of mining taxes) is being utilised.

Without transparency, we risk finding ourselves in a situation where the windfall tax is reintroduced with ordinary Zambians still not benefiting from the industry,” Chishimba said.

He said the current mining tax regime is not adequate enough to effectively guarantee benefits for the country’s economy.

Chishimba said the government had not done much to seize the opportunities that exist in the extractive industry to grow the economy.

He said the government could help strengthen the local currency by ensuring maximum benefits from the mining industry and attractive commodity prices on the international market.

Chishimba further urged government to strictly regulate the externalisation of mining revenue if the country’s economy is to benefit meaningfully from the industry.

And committee member George Mpombo said Zambia has been turned into a ‘fool’s paradise’ with foreign investors reaping benefits from the country’s resources, while local people have no benefits to refer to.

Meanwhile, the CCZ has challenged government to establish a transparent environmental fund for use to clean up the environment being destroyed by the mines. In its latest policy brief on extractive industries, the CCZ stated that there was need for an increase in the sharing of benefits of the proceeds of mining.

“Zambia must immediately develop a policy that provides for retention of a percentage of copper proceeds in Zambia, for example, the local currency will be stabilised and more funds can be available for investments by local Zambians if investors are compelled to deposit at least 50 per cent of their profits with local banks,” it stated.

It stated that local councils should be empowered to decide what taxes to charge the mines so that revenue gained is used to improve livelihoods within the mining areas.

Through its social and economic justice programme, the CCZ, since 2009, has undertaken activities aimed at promoting transparency and accountability in the management of natural resources. These included raising community awareness on natural resource management, commissioning a research on uranium mining policy review and the launch of the report on its findings and engaged parliamentarians on private members’ motion advocacy.