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Removal of windfall tax no longer holds - Macwan’gi

Removal of windfall tax no longer holds - Macwan’gi
By Masuzyo Chakwe
Sun 27 Mar. 2011, 04:00 CAT

FOREIGN mining investors are reaping more than they are investing in the country, says Professor Mubiana Macwanígi.

Prof Macwan’gi, who is a research professor of public health and director of the Institute of Economic and Social Research at the University of Zambia, said the removal of the windfall tax no longer holds due to the high metal prices.

She said the windfall tax was scrapped off because of the global financial crisis and the low copper prices that were prevailing at the time.

She said currently, the situation was different and there was need to make sure that the mining industries contribute more to the government and ease the tax burden on Zambians who currently pay high taxes by broadening the tax base.

Prof Macwan’gi said the windfall tax was a good idea which would not disadvantage the mines but benefit the economy during price booms in the mining sector.

“It’s very important to reintroduce it as long as we have a mechanism where the tax is triggered when prices exceed a certain threshold. This ensures equity. It may work if it is done genuinely,” Prof Macwanígi said.

She also said the debate on windfall tax needed to be de-politicized and objective studies conducted to assess its benefits and costs to Zambia.

Prof Macwan’gi said currently, the contribution of the mining industry to tax revenue was inadequate because royalty tax is too low at three percent compared to Pay As You Earn (PAYE).

She said foreign investors had been given a lot of tax concessions which were costly to the country and undermined the local economy.

“It is not adequate. Most of the money is being externalized. That’s why despite the rise in copper prices and rise in exports, the kwacha is still weak because returns from copper go to foreign countries or investors. The jobs created are mostly in the low-income category and the conditions of work do not meet the minimum international recommended standards,” she said.

Prof Macwanígi said taxes from the mining industry were inadequate and there was very little corporate social responsibility from the mining industry.

Labels: WINDFALL TAX

posted by MrK @ 4:45 AM