Maravi

PF not for windfall tax - Scott

PF not for windfall tax - Scott
By Edwin Mbulo in Livingstone
Mon 28 May 2012, 13:30 CAT

VICE-PRESIDENT Guy Scott says there is a high level of disobedience in tax payments by mining companies in Zambia. Addressing journalists in Livingstone yesterday, Vice-President Scott, who defended his government's position not to reintroduce windfall tax on the mines, said laws need to be put in place to ensure tax compliance in the mining sector.

He said the PF was not for windfall tax but only needed to put in place laws that would necessitate the payment of taxes by the mines operating in the country.

Zambia's mining industry which provides over 80 per cent of the country's export earnings only contributes less than two per cent to government revenue, ca falt which led to the introduction of windfall tax by the Levy Mwanawasa's government in 2008.

Under the Mwanawasa tax regime, it was estimated that Zambia would have earned not less than US $415 million from windfall taxes, which were designed to be in effect at three different trigger points.

But Vice-President Scott said his government was not for windfall tax but compliance in tax payments by the mines.

"We need to put in place tax laws that will enhance the compliance of the tax regime; it's not about formulating fancy tax clauses. Some mines have records of non-compliance of tax in other countries, we are not for windfall tax but compliance," he said.

Vice-President Scott who was flanked by Southern Province minister Obvious Mwaliteta, PF provincial chairman Joseph Akafumba and provincial political secretary Brian Hapunda said foreign investments needed to be properly managed.

The previous tax regime for the mines which was removed by Rupiah Banda's government came up with windfall taxes on copper and cobalt.

For copper, the first trigger price (FTP) was US $5,512, meaning that the agreed breakeven point cost was US $2,756. The Second Trigger Price (STP) was US $6, 614 and third trigger price (TTP) was US $7,716.

Windfall tax was then paid as follows: If the monthly average price (MAP) (i.e. weighted average LME price for the month) did not exceed the FTP, windfall tax would not be paid.

If MAP was between FTP and STP, the windfall tax to be introduced was 25 per cent or US$2.50 per pound. If MAP was between STP and TTP, the windfall rate for this would be 50 per cent or US$ 3.00 per pound and if it exceeded TTP, windfall profit would be 75 per cent or US$3.50 per pound.

This measure was intended that whenever prices of the metals increased beyond two times the cost of production, Zambia would also gain.

For cobalt, the FTP was US$55,116, the STP was US$77,162 and the TTP was US$88,185. As with the copper costing, the provision for windfall taxation was 25 per cent, 50 per cent and 75 per cent.

And Vice-President Scott said the PF government implemented the UPND's petition to the MMD government to resettle displaced people in Sichifulo.

And on his personal donation of K13 million for the construction of a toilet at tandabale Market, Scott said it was in his powers and responsibility as Vice-President to make donations when he felt like doing so.

"I did what is my duty to do, I was passing by to break the ground for the toilet and I felt justified to donate K13 million because HH Hakainde Hichilema had also donated the same amount. So if he says he donated K13 million for the purchase of the land, I will also say I built the toilet," he said.

And Vice-President Scott said it was sad that people of Kasiya were sharing water with animals, pledging that the situation would be resolved through the disaster management unit.

"When you are here at Sun (hotel) you may think that you are in South Africa but when you go outside you encounter poverty and as you get to the rural areas, it gets extreme," he said.

On the issue of maize bought by the Food Reserve Agency going to waste, Vice-President Scott said the PF has inherited maize stock that was poorly stored.

"We have two million tonnes of maize against storage facilities that are meant for 300,000 tonnes of maize, so with poor storage it gets rotten, we are trying to address the issue of storage facilities," said Vice-President Scott.

Labels: GUY SCOTT, PF, WINDFALL TAX

posted by MrK @ 4:50 PM