Sunday, December 15, 2013

Milupi backs SI 89 Revocation
By Chiwoyu Sinyangwe and Moses Kuwema
Fri 01 Nov. 2013, 14:01 CAT

PRESIDENT Michael Sata's decision to reverse SI 89 has saved the country millions of dollars from people conniving with mines, says Charles Milupi. On Monday, President Sata cancelled Statutory Instrument Number 89, which finance minister Alexander Chikwanda signed on October 4.

SI 89, which was to be in force up to September 30, 2014, was to reverse the November 2011 decision of the PF government to impose a 10 per cent export levy on copper concentrates and ores to encourage value addition to copper exports and improve accountability in the vast mining sector.

SI 89 has since been replaced with SI 99, which has reinstated the 10 per cent export duty on copper concentrates and ores, which Chikwanda briefly abolished after being lobbied by First Quantum Minerals and Lubambe Copper Mines.

Commenting on the developments, Milupi, who is opposition Alliance for Democracy and Development president, said there was "something deeper" that motivated Chikwanda to sign SI 89.

"The mining industry has so sophisticated people and it's not right that we have institutions, whether it's Ministry of Finance or individuals, conniving with these people to further disadvantage the country," Milupi said in an interview yesterday. "The decision by the President to cancel that SI 89 was the right decision, and it is not going to result in any revenue loss to the country. I find it extremely strange that finance minister is saying the country is going to lose revenue from the reversal of SI 89. He needs to explain that."

Chikwanda this week told the parliamentary expanded committee on estimates that President Sata's reversal of SI 89 would see mining firms stockpiling ores and concentrates fail to export the unfinished resources and therefore raise no revenues to pay tax to treasury.

But Milupi, a former Public Accounts Committee chairperson, said there was a "deeper motive" that drove Chikwanda to sign SI 89 without approval of the President.

"Any measure that is affecting revenues is a matter that should be tabled before full Cabinet and only when it's approved can you sign it," he said. "Now, the President was giving an impression that this matter was not taken to Cabinet; it was just the Minister of Finance who decided to issue that Statutory Instrument. That is a very serious omission by the Minister of Finance and he must explain what his interest was in signing the SI…unless he is telling us that they took the SI to Cabinet and that when it was being discussed, the President was inattentive. That is a very serious omission. I think the President was very kind in trying to blame the commissioners from ZRA because the buck stops at the door of the minister. There is a signature of the minister on the SI unless he is an ignorant minister but that is not the case… All we are saying is that in terms of the interest of the nation, their arguments do not hold water."

Milupi said it was not surprising that Chikwanda, who labelled proponents of the windfall tax on base metals as "lunatics" was championing a regulation that was going to deprive Zambia of her fair share of the benefits from the mining sector.

"For anyone to argue that the reversal by the President will lead to tax revenue loss clearly indicates that there is something deeper in this whole issue which any sensible person can see straightforward," he said.
And Milupi said the argument that the country did not have enough smelting capacity "does not hold water".

"I find it strange to even suggest that because the country has no smelting capacity and therefore the mining companies will not be able to smelt the concentrates... that is very strange," Milupi said. "Even if that was true, the country may have lost revenue if the decision of the President was to ban the export of the concentrates so that the mining companies won't be able to process what they get and therefore not raise revenues from it and not pay government what's due."

Milupi accused Chikwada of working against the PF manifesto of more jobs and wealth creation for Zambians.

"Now, if you export ores and concentrates, you have cut off the employment opportunities in terms of refining and smelting and any other processes," Milupi said. "And that means you also have to sell the concentrates and ores at a less price. Therefore, the country is not getting as much as it would have got. And most of our ores exist with other metals, especially precious metals like silver, gold, platinum. Now if you export concentrates, that opportunity to recover those precious metals is lost to the country because all you are declaring when exporting is that this is so much copper. You are not going to say this is silver or selenium."

Milupi said encouraging the export of raw copper would see more and new mining firms resisting to establish smelting facilities.

"The significant portion of our copper is not from sulphide ore but from oxide ores, and this means sulphide ores are not smelted; it is electro-wind," said Milupi. "So, to say we have no capacity to process it and so on raises a lot of questions of the real motive for their earlier decision of lifting that 10 per cent export levy."

Meanwhiles, commerce deputy minister Miles Sampa says the stockpiling of raw minerals by mining firms is a deliberate move to avoid paying tax.
Debating the 2014 budget in Parliament on Wednesday, Sampa said there was too much tax evasion by mines, adding that some of the mining firms were known internationally.

He said Zambians were getting "ifikwangwa" (residue) from the mines.
"All they want is zero tax. Even the stockpiling of raw minerals is a deliberate move aimed at avoiding paying tax," he said.

Sampa said the non-payment of tax by some mining companies was causing budget overruns.

He said the expenditure side in Zambia never goes down for instance, on the issue of salaries.

"People cannot allow their salaries to go down, even when they have a leader who opposes the increase, his people will do a don't kubeba on him," Sampa said.

He said the government would ensure it has full control of the country's economy and assets.

But Monze UPND member of parliament Jack Mwiimbu rose on a point of order in which he wanted to know if Sampa was in order to lament about tax evasion instead of giving the government's policy.

Speaker Patrick Matibini ruled that as much as Sampa was at liberty to highlight the problems of tax evasion, it was important for him to highlight how the problems could be resolved by the government.

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