Maravi

Economist urges high revenue collection from mines

Economist urges high revenue collection from mines
By Kombe Chimpinde
Mon 07 Mar. 2011, 05:00 CAT

A UNIVERSITY of Zambia lecturer of economics says the government is not maximising its revenue from copper. Professor Venkatesh Seshamani said Zambians still needed clarity on why the country decided to maintain a low tax rate compared to the average 47 per cent rate in the southern region.

Prof Seshamani said the issue of the windfall tax was now immaterial and the government should adopt a preferred system that would still maximise revenue collection from the country’s core natural resource.

Prof Seshamani made the remarks when he featured on ZNBC’s Frank Talk programme last week.

“I don’t care whether you have a windfall tax or some other tax. Call it whatever you want. What is important is that they should be able to maximise revenue from the investments, production and sale of copper,” he said. “That’s the most important thing now. If you look into the Ministry of Finance, the revenues accruing to the country were only 33 per cent and according to the finance minister, that now it is going to 47 per cent, which is quite respectable in the region. Now the question is whether with the introduction of the windfall tax we could really get more than 47 per cent.”

Prof Seshamani said much as the government was trying to create a conduce environment for investment through creation of incentives, which was vital, it needed to hike its rates because they were currently low compared to other states in the region.

“What is of concern again is what the Minister of Finance announced in Parliament that they are providing a long-term fiscal regime to the mining companies of 10 years. What this means is, quite alright, they will pay more, but it will still be low in terms of the rates. My concern is probably if you look at the tax rates, they seem to be eventually low compared to the SADC low average,” said Prof Seshamani.

“For example, you have raised royalty tax from 0.6 to three per cent but the SADC average is about six per cent. For instance, if you take the corporate tax it’s about 35 per cent. Angola, Namibia, Tanzania and others it’s 45 per cent or even more. Maybe I missed. You know these are issues that government must come out clear on and explain,” Prof Seshamani said.

Labels: VENKATESH SESHAMANI, WINDFALL TAX

posted by MrK @ 2:22 PM