COMMENT - The effective tax rate for the mines in Zambia isn't even close to 31%. PAYE is not taxes paid by the mining industry, they are taxes paid by workers. Your tax liability doesn't defer to the people who work for you. You might as well say that the copper purchasers paid the taxes, which would be more accurate, but still wrong.
The Zambian government should engage foreign auditors- Chamber of mines
TIME PUBLISHED - Wednesday, December 14, 2011, 4:31 pm
NCHANGA Mine rescure Team B Captain Jonathan Kolala inspects air underground during the Zambia Mine Rescure Association competetion at Namundwe MineTHE Chamber of Mines of Zambia has recommended that the Government should appoint an independent international auditor to carry out compliance audits to address concerns expressed by stakeholders and members of the public on whether the mining companies are honest enough in their voluntary declarations.
Chamber general manager Frederick Bantubonse said in a statement obtained in Kitwe yesterday that it was imperative that assertions by some parties were addressed and subsequently appreciated.
Mr Bantubonse noted that in January 2008 late president Levy Mwanawasa told the nation that the Government had discovered that effective tax rate in Zambia was the lowest in the world at 31%.
The Government then wanted the effective tax rate to be increased to 47%.
He explained that after the budget was presented to Parliament in 2008, which proposed to introduce, among others, windfall tax, the mining industry contracted tax consultants to advise on what the effective tax rate would be once the new tax measures were introduced.
The consultants informed the industry that the effective tax rate would be well over 80% far above the 47% that was targeted by the
Government.
[Huh? That's insane. - MrK]
“The perception by many people in Zambia seems to be that the abolition of windfall tax means that mining companies have been exempted from paying taxes,” Mr Bantubonse said.
He said it was not the case as mining companies pay other taxes including company tax, minerals royalty tax, Value Added Tax, and others.
The company tax at 30% of profit, in particular, would increase greatly once carry over losses and capital allowances are liquidated and more mining companies become tax liable.
[And yet taxes would disappear completely, if the price of copper collapsed. - MrK]
“There is still, therefore, a form of windfall tax in operation called variable profit tax which is based on profit and is triggered when a mining company makes operating profit of over eight per cent,” Mr Bantubonse explained.
[That's BS. The 'variable profit tax' is not 'a form of windfall tax'. The variable profit tax can only be calculated to the degree that the mining companies deign to declare any profits - which they don't. Glencore's Mopani was caught redhanded using 'price transfer' or 'money laundering', and the Finance Minister did nothing. - MrK]
He said in view of the misunderstanding, the chamber was recommending to the Government to engage an independent international auditor to carry out compliance audits.
Efforts to get mines minister Wilbur Simuusa and his deputy Richard Musukwa failed as their mobile phones were not reachable by press time.
[Times of Zambia]
Labels: AUDITING, CHAMBER OF MINES, FREDERICK BANTUBONSE
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COMMENT - This is a direct betrayal of the electorate. The Zambian state must collect the $1.3 billion a year it is owed. Anything less than that is an insult. The attempt to paint income tax by workers as taxes paid by the mines is trickle down brainrot at it's worst. If it is the same, then why don't the mines object? It doesn't bare two seconds of contemplation. Also, is extremely disrespectful to the people of Zambia, that openness about decisions of this magnitude only takes place after the fact, after the decision has been made. This is not democracy.
Government won’t re-introduce windfall tax – Veep
TIME PUBLISHED - Tuesday, November 15, 2011, 8:28 am
VICE-PRESIDENT Guy Scott has said the Patriotic Front (PF) government will not re-introduce the windfall tax to save the economy from collapsing and urged Zambians to seek relief in the US$200 million royalty tax that has been gained from mining companies.
Dr Scott, who was reacting to statements by some trade unions and stakeholders that
the PF cheated people using the windfall tax said the government had
managed to remove US$200 million from the mining companies and transferred it to the workers in form of Pay-as-You-Earn(PAYE).
Dr Scott explained that whether the money drawn from the mining companies would be referred to as windfall tax or mineral royalty, the fact remains that the Zambian government had gained a huge amount of money and relieved workers from paying high taxes.
[You did not collect what was owed and is owed, and is going to be owed next year. If copper prices don't collapse in between, which the PF has no control over. When prices return to normal, the windfall will have gone. Mining companies will be gone too. - MrK]
He said the new PAYE in the 2012 national budget was the start of better things to come while the taxation system was still under review. The vice president said the US$200 million gained from the increased mineral royalty tax had been imposed on the mining companies to close the gap created by the reduction in thresholds on PAYE and seeks to earn ordinary Zambian workers an average of K1 million on their take-home-pay.
[Now that is all fine and dandy, but it is no $1.3 billion in taxes - income tax, and dividends to ZCCM-IH, which is what is owed every year, with the present taxation system. And it will be easily collected through the Windfall Tax. So collect it, or get out of the way. - MrK]
In an interview in Lusaka yesterday, Dr Scott said the increased mineral royalty tax had not reflected in the 2012 national budget because the amount had been captured by the mineral royalty tax. The vice president said the mineral royalty tax was the best form of tax because it stops mining companies from cheating government in terms of how much they were making.
[Then raise it to 20% of turnover, and drop all other taxes. The mineral royalty tax IS a great tax, but 6% is not enough. Plus, I want to see the return of all the taxes that have not been paid since privatisation. - MrK]
Dr Scott said the government had not stopped managing the tax system to ensure that it benefits the Zambian people. He said the tax was determined by the volumes of copper they had sold internationally and that systems had been out in place to ensure that Zambians benefit from the system.
Union president Mundia Sikufele said in Kitwe yesterday that the union felt betrayed because the windfall tax was one of the major items the PF used during the campaign.
“What matters is how much the mining companies will contribute to the national budget whether it is called windfall tax or mineral royalties. Our aim was to save at least US$200 million so that it goes to the workers in form of tax relief,” Dr Scott said.
[$200 million is still $1100 million short. - MrK]
The vice president said the government had succeeded in removing US$200 million from the mines to transfer it to the workers as the PF administration moves to meet its campaign promises.
The new budget has provided for the tax free bands that start from a minimum of K2 million that will fall out of the tax bracket which means that the workers earning that amount would not be subjected to PAYE.
But National Union of Miners and Allied Workers (NUMAW) has questioned the Government for what it called back peddling on the re-introduction of the windfall tax. Union president Mundia Sikufele said in Kitwe yesterday that the union felt betrayed because the windfall tax was one of the major items the PF used during the campaign.
And Chamber of Mines general manager Fred Bantubonse said it was important that the Government realised that dialogue with stakeholders before the re-introduction of windfall tax was the way forward. HE Civil Servants and Allied Workers Union of Zambia (CSAWUZ) has also urged Government to pursue the introduction of windfall tax if Zambia was to move forward.
Meanwhile, the German Government is expected to send its director of Southern Africa for the Ministry of economic corporation and development Dr Ingolf Dietrich to Zambia for talks with the minister of Finance Alexander Chikwanda. The talks would establish entry points in the national budget which the German Government would fund the one per cent that had remained for donor partners. In an interview in Lusaka on Sunday, German Ambassador to Zambia Frank Meyke said the discussions will take place on November 29 and November 30 November, 2011.
Mr Meyke said the German government was impressed with the national budget because it gave workers greater relief on their take-home pay which would promote investments and saving.
[Times of Zambia]
Labels: CHAMBER OF MINES, FREDERICK BANTUBONSE, GUY SCOTT, MINING, PAYE, PF, TREASON, WINDFALL TAX
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Katema asks govt to protect Zambians from KCM
By Kabanda Chulu in Kitwe
Sat 15 Jan. 2011, 04:00 CAT
CHINGOLA parliamentarian Joseph Katema says the government should protect the lives of Zambians from KCM’s quest to reap abnormal profits at the expense of polluting the environment.
And some government officials have said
Chamber of Mines of Zambia general manager Frederick Bantubonse is a wrong person to sit on the Environmental Council of Zambia (ECZ) board.
Reacting to the latest pollution incident where Konkola Copper Mines has polluted the Kafue River with preliminary ECZ results indicating a presence of heavy metals in the River, Katema said government should intervene and protect the lives of people especially Chingola residents.
“These are the issues we expected Vice-President George Kunda to address when he visited Chingola but he kept quiet and focused on trivial issues and when government keeps quiet people will draw up conclusions that government is ‘eating’ those abnormal profits with KCM because why should government turn a blind eye when KCM is polluting the environment at the expense of making profits,” Katema said.
“We want somebody senior like Vice-President Kunda or President Banda to take leadership and demand substantial compensation from KCM the way President Obama did with BP during the oil spill in the Gulf of Mexico .”
[Nice hope, except that the MMD is bought and paid for. - Mrk]
And Chingola’s Twatasha Ward councillor George Sichula accused the MMD government of having a ‘dirty covenant’ with KCM.
“This is why KCM is doing everything with impunity and it is not only polluting the environment but also disregarding labour laws and related Zambian regulations,” said Sichula.
“Since we have weak laws that results in K21 million fines, government should put in place measures that will compel offenders pay compensation towards victims and rehabilitation of affected area.”
And Nchanga parliamentarian Wilbur Simuusa said continued pollution of the environment by KCM was getting out of hand.
“It is barely a few weeks after a similar incident occurred and it is strange that this is happening only in Zambia because where Vedanta (KCM holding company) operates they follow regulations but here KCM is putting at risk the lives of many people,” said Simuusa.
And some government officials said Bantubonse should be removed from the ECZ board where he is the vice-chairperson.
“ Bantubonse is representing the chamber of mines where he is general manager and is saying the law should be lenient in addressing cases of environmental pollution. But in another breath, he is on ECZ board where he has to push for higher penalties for environmental pollution. Since 2009 or so, ECZ has had no board chairperson, so in essence, Bantubonse is the ECZ chairperson. He appeared at Parliament and made submissions that the law should be considerate on pollution. But ECZ, which he represents, the council is saying the law is not deterrent enough. Companies that pollute are charged very small amount,” said one official.
The official said there was clear conflict of interest on Bantubonse’s part.
Labels: FREDERICK BANTUBONSE, JOSEPH KATEMA, KCM, POLLUTION
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COMMENT - More arrogance from the mines. Not contented with the abolition of the windfall tax, they want the abolition of the variable profit tax as well. According to mr. Bantubonse, the mining sector does not need to support us, we need to support the mining sector. How long will the Zambian people be taken for a ride?
Parliamentary Committee takes Bantubonse to task over windfall tax
By Florence Bupe
Mon 18 Oct. 2010, 18:50 CAT
THE expanded Parliamentary Committee on Estimates yesterday took to task Chamber of Mines of Zambia general manager Frederick Bantubonse for commending government on its continued refusal to re-introduce windfall tax for mining companies.
The Chamber of Mines appeared before the committee to make its submissions on the 2011 National Budget that was recently unveiled by government. In his submission, Bantubonse said it was good that government had not succumbed to pressure to have the windfall tax re-introduced for mining firms.
“The importance of mining to the Zambia economy cannot be overemphasised. The mining sector, therefore, needs to be supported by everyone to enable it grow,” Bantubonse said. “It is in this vein that we salute and support the stand taken by the finance minister not to succumb to public pressure to reintroduce the windfall tax.”
Bantubonse further submitted that government should remove the variable profits tax, much to the annoyance of the members of the committee.
He argued that removing the variable profits tax would boost investor confidence and allow the mining sector to grow and in the long term contribute more meaningfully to the national economic growth.
Bantubonse claimed that Zambia’s calculation of the windfall tax in the sense it was proposed for implementation was too high and could have completely killed the mining industry.
“With the windfall tax in place, experts had worked out that the effective tax rate was over 80 per cent. This is clearly unworkable and could have killed the investments into mining projects. We further agree with the finance minister that no mining country in the world has the windfall tax in the form that it was formulated in Zambia,” he said.
But committee chairperson Highvie Hamududu warned Bantubonse against taking the emotions of Zambians for granted.
“The statement that you are happy that government has withstood public pressure on the windfall tax is very serious and it could have serious implications.
Zambians, who are the public in this case, are the owners of the land and therefore, the minerals, and you are happy that the concerns of the owners are not being taken into account?” Hamududu questioned.
Luena member of parliament Charles Milupi also questioned the premise on which Bantubonse was defending the foreign mines on the payment of tax. He also differed with Bantubonse on his argument that mines were actually in a way paying windfall tax through variable profits tax.
Milupi cautioned Bantubonse against misleading the public by suggesting that windfall tax was equivalent to variable profits tax.
There have been consistent calls for government to reintroduce windfall tax as a sure way of the country benefiting more meaningfully from the mining industry but government has remained adamant.
Labels: CHARLES MILUPI, FREDERICK BANTUBONSE, HIGHVIE HAMUDUDU, PARLIAMENTARY ESTIMATES COMMITTEE
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MUZ urges mines minister to defend plight of miners
By Mwila Chansa in Kitwe
Fri 23 July 2010, 04:00 CAT
MINEWORKERS Union of Zambia (MUZ) secretary general Oswell Munyenyembe has advised mines deputy minister Gabriel Namulambe to focus his energies on addressing the plight of miners and not defending investors.
Reacting to Namulambe’s statement that MUZ should have consulted the government before issuing a statement to the media that they would oppose any attempts by government to bring in Vale, a Brazilian mining giant, to invest in Zambia’s mining operations, Munyenyembe said MUZ was not a government wing.
“Mr. Namulambe served in Levy Mwanawasa’s government as a full cabinet minister. Before that, he even served as Copperbelt Permanent Secretary. He should know how MUZ operates, we are not a wing of government and we can’t consult them before issuing a statement on an issue that affects our members,” he said.
Munyenyembe said MUZ had on several occasions met President Rupiah Banda and informed him of issues concerning bad roads in mining townships, engagement of ill-qualified expatriates that were getting more money than qualified Zambians and out-sourcing of manpower by the mining investors.
He said MUZ expected the government to seriously address issues when of ill-treatment of miners by investors. Munyenyembe said so many things had gone wrong in the mines and that some mines had even engaged expatriates in their human resource departments.
“So these are the issues Namulambe should be looking at. We know that he is a job seeker but he should not mislead people. He should stay away from MUZ or do something else,” he added.
And Munyenyembe said MUZ had information that 168 people were supposed to be laid off at Konkola Copper Mines (KCM)’s Nchanga concentrator.
He added that the union also had information that KCM intended to outsource services at the hospitals, saying this would frustrate Zambians.
“We have information that they KCM want to bring in doctors and other heath workers from India to come and run the hospitals. Where is the protection from the government?” wondered Munyenyembe.
MUZ last week vowed to oppose any attempts by the government to bring in a Brazilian mining giant, Vale, to operate in Zambia.
MUZ president Rayford Mbulu alleged that Vale had a bad human rights track record where they operated and that United Steel Workers who were working under Vale had been on 12-month strike in Canada and that Vale had not even bothered to meet the union in order to resolve the impasse.
Meanwhile, Nchanga member of parliament Wylbur Simuusa said there was a lot of anxiety and apprehension amongst miners over KCMs tendency to outsource services.
He said miners wanted clear answers from KCM management and the Ministry of Labour over the issue of outsourcing.
He said outsourcing was disadvantaging miners because the foreigners who managed outsourced units came with their own conditions.
Simuusa also said mining companies had a moral obligation to give back to the communities they operated in.
Reacting to the Chamber of Mines general manager Frederick Bantubonse’s statement that mining companies are not obliged to develop infrastructure in the areas where they operate, Simuusa said mining companies were reaping billions of kwacha from Zambian communities and were morally expected to give back to those communities.
Labels: FREDERICK BANTUBONSE, KCM, MINERS, MUZ, OSWELL MUNYENYEMBE, WYLBUR SIMUUSA
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COMMENT - More shilling for corporate profits from the Chamber of Mines.
Mining companies not obliged to develop areas they operate in - Bantubonse
By David Chongo in Solwezi
Mon 19 July 2010, 15:10 CAT
MINING companies are not obliged to develop infrastructure in the areas they operate but they can do community social responsibility projects on voluntary basis in order to be viewed as good citizens, says Chamber of Mines of Zambia general manager Frederick Bantubonse.
And Centre for Trade Policy and Development (CTPD) executive director, Saviour Mwambwa has challenged government to reveal the contents of ‘secret’ Development Agreements that it signs with mining companies to residents of investment areas.
Speaking at a public discussion hosted by Caritas Solwezi in conjunction with CTPD on the subject: “the mining tax debate: an endless tug of war’’ on Saturday, Bantubonse said there were no such conditions requiring mining firms to build developmental structures in their areas of operation.
Bantubonse said it was not clearly stated in statutory regulations whether the mining firms had a strictly assigned role in developing areas where they worked part from their core businesses.
“It’s not a condition that you should build a road; it’s voluntary for you to do so. If Lumwana wants to do it, let them build but that is the responsibility of the government. There is division on who should do what and who should do what. Infrastructure development is up to the central government to do that,” he said.
He said residents of North Western Province should not blame the mines and transporters for causing damage to the roads in the region, saying even in Chingola, truckers to Kasumbalesa border were not charged anything despite damaging roads.
He said if there was a remedy, it should be introduction of tollgates.
And Bantubonse has described as unfortunate the decision by Lumwana Mine to distribute information booklets on uranium to villagers in chief Mukumbi’s area in English.
He said uranium was governed by rigid regulations, which needed to be well understood by concerned parties but advised that people should raise alarm if there was something wrong in their areas.
He was responding to a concern by chief Mukumbi’s son Kennedy Muluka who questioned why “illiterate” people in his area were handed sensitive uranium information in English which most of them could not understand.
And Mwambwa said there was growing dissatisfaction from people in areas where mining firms were not contributing satisfactorily to local development.
He said the local people were not seeing the benefits of having such huge investment in their areas, saying such situations left people wondering whether the secret agreements really contained local people’s concerns.
“The ordinary people are not seeing the benefits. Local people are supposed to share the revenue based on a certain percentage with the central government. Certain amounts should be allocated to them; a portion should be returned to specifically develop these areas where resources are coming from,” he said.
Mwambwa observed that it had now become a tendency for central governments to forgo their responsibility to develop infrastructure for citizens, leaving it in the hands of financial institutions like the World Bank.
“Infrastructure is not developed here. Why should the World Bank come to develop the province when there is money from the mines? Government should come in the open and explain to the people how these things (development agreements) are done. There is no transparency from the government on these issues,” he said.
Mwambwa advised that central government should deliberately draw up a policy in the constitution that would guide the specific percentages in benefits to the concerned local people regarding development agreements.
Meanwhile, Rodney Machila, sitting in for deputy permanent secretary Nkolola Hazemba and other stakeholders to the debate, expressed displeasure over the apparent boycott by officials from the local council and the two mining companies Kansanshi and Lumwana.
Labels: CHAMBER OF MINES, FREDERICK BANTUBONSE
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Levy’s legacy on mining taxation needs to be restored – Chitala
By Chiwoyu Sinyangwe
Mon 07 Dec. 2009, 04:01 CAT
LEVY Mwanawasa’s progressive legacy on mining taxation needs to be restored, Lusaka political and economic consultant Dr Mbita Chitala has said.
Meanwhile, Chamber of Mines of Zambia (CMZ) has said Zambia is expected not to attract further investment in the mining sector despite the recent recovery in commodity prices as the country lacks investor confidence.
Copper prices last week on the London Metal Exchange reached over US $7, 100 per tonne, near the previous session's peak of $7,170, the firmest since late September 2008, promoting calls from key stakeholders for the government to restore the windfall tax to help the country tap into the ‘abnormal prices.’
However, the government has remained adamant with commerce minister Felix Mutati last week saying Zambia will not introduce new taxes for the mining sector to encourage further investments into the industry.
Dr Chitala last week said late president Mwanawasa’s decision to come up with the popular mining fiscal regime of 2008 was well thought out and should be restored.
He said the absence of the revenue estimates from the mining sector in the 2010 national budget was an indication that the country was not going to reap anything from its lifeblood.
“We need to revisit this. This legacy that Mwanawasa left us was progressive and it should be re-addressed and I am glad that we are discussing it as of today,” Chitala said.
“…when I was in government at the time when we were negotiating with the mining companies over these matters…in fact, I was the deputy minister in the office of the President to Mwanawasa, we went to great lengths to agonise ‘how do we make Zambia benefit as well from this God-given resource in terms of copper and cobalt?’”
Dr Chitala said what late president Mwanawasa did by abrogating and abolishing the Development Agreements (DAs) was an act of bravery.
“…I remember Mwanawasa said to me, ‘Mr Chitala, what we are about to do, in other countries like Chile, Allende Salvador Isabelino Gossens was overthrown on account of this,’” said Dr Chitala.
“So, what Mwanawasa did was a very brave thing that with insight…he abrogated the DAs and brought us a tax regime which was going to give us US $415 million.”
Meanwhile, CMZ general manager Frederick Bantubonse said Zambia was not expected to attract more investments into the mining sector as the current mining fiscal regime did not provide consensus between mining companies and the government.
Bantubonse said the current mining fiscal regime clearly spelt out that the government would not enter into new development agreements, a move he said made it difficult for the country to attract future investment despite the rising global commodity prices.
He said that was why Zambia only had junior mining companies and was struggling to attract global international mining firms such as Rio Tinto and BHP Billiton.
“We need to agree. But as of now, the government hasn’t said this is the situation. We need a consensus. The country is divided,” Bantubonse said.
“If we are to restore investor confidence, there has to be need to look at the laws and that we have not done that yet. 2009, there is no agreement…2008 cancelled the development agreements and there have not been any agreement.”
Bantubonse also said the government’s decision not to hike mine taxes next year was not enough as investor confidence went beyond taxation.
He also said Zambia’s mining sector still suffered from political risk.
“You still have people saying that when I come into power, I will chuck that one out…investors are very sensitive to that,” said Bantubonse.
Labels: CMZ, FREDERICK BANTUBONSE, MBITA CHITALA, MWANAWASA, WINDFALL TAX
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Bantubonse implores legal means to raise govt shareholding in mines
Written by Chiwoyu Sinyangwe
Monday, April 20, 2009 4:31:56 AM
INCREASING government shareholding in foreign mining companies in the country can only be done through a normal business transaction, Chamber of Mines of Zambia (CMZ) general manager Frederick Bantubonse has said.
Commenting on recent indications by mines minister Maxwell Mwale that the government would raise its stake in foreign-owned copper mining firms up to 35 per cent to have a bigger say in their running and prevent mine closures, Bantubonse said there was nothing wrong with the intention provided it was done through legal and commercially accepted procedures.
Bantubonse, however, advised that it was important for the country to critically weigh the benefits and pitfalls of the country increasing its equity in mining companies.
He also wondered the method the government was going to use to achieve its intention of increasing shareholding in mining companies.
"Anybody can acquire shares in any mining company but that should be done commercially...it should be trader-seller relationship. In fact, Equinox is now selling shares in Lumwana and the government is free to buy," Bantubonse said. "Probably the only question that should be asked is: to whose benefit? It is not always every year that shareholders draw dividends and sometimes the same shareholders have to inject in more capital to expand in the activities of the mine if the mine is not making profits...so, should the government get money from schools and hospitals and put it into running the mines? It is not up to the Chamber to answer those questions but all Zambians."
When reminded that the government had indicated that it did not plan to nationalise the copper mines, but would negotiate with the companies and seek to convert debt owed to government into equity, Bantubonse responded: "What obligations? I really don't know how the government is going to achieve that...when the mine is placed under care and maintenance, it is not the same as saying the mines has been abandoned where the government can push to get the assets for free but it means we are not able to produce due to the market conditions and as soon the environment improves, the mine would be re-opened, even next week."
Bantubonse also said foreign mining companies have over the last two to three years poured over US $4 billion of investment in the local mining sector compared to less that US $100 million which was injected in the country's lifeblood two years preceding the privatisation process.
Mwale recently said the government would target a stake of between 25 to 35 per cent from the average of 15 per cent and that mining firms would soon be informed of the new plan. The new plan cheered mine unions who had been urging the government to take a bigger stake in the mines to exert influence, prevent mine closures and save jobs.
Labels: CHAMBER OF MINES, FREDERICK BANTUBONSE, NATIONALISATION
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Zambia Approves Amendment to Mining Act to Increase Taxes
By Geoffrey Kapembwa
March 26 (Bloomberg) -- Zambia's parliament approved an amendment to the Mines and Minerals Act that will increase taxes and abolish existing agreements between the government and mining companies, the Zambian Chamber of Mines said.
The bill, which will be signed into law by President Mwanawasa on April 1, will lift royalties on sales fivefold to 3 percent and increase corporate income tax to 30 percent from 25 percent. That will raise the effective tax rate on miners to 47 percent from 31 percent.
The government's ``unilateral decision to dishonor existing development agreements'' is disappointing, Fred Bantubonse, general manager of the chamber, said in a telephone interview from the capital, Lusaka, late yesterday. ``This is arm twisting.''
Zambia, Africa's largest copper producer, expects to earn $450 million in additional revenue this year from higher mining taxes as it seeks to benefit from the metal's seven-year rally, Kolombo Mwansa, the southern African country's mines and mineral development minister said on March 4.
The law will result in miners reconsidering any expansion projects because of poor returns, Bantubonse said.
``Any bad law always affects future investment,'' he said.
Copper accounts for about 70 percent of Zambia's export income and production has been rising since the nation sold off state-owned mines 1999, almost three decades after they were nationalized. The proposed increase in taxes comes amid record profits earned by companies including Vedanta Resources Plc., India's largest copper producer, and First Quantum Minerals Ltd., a Vancouver-based miner of copper in Africa.
-- Editor: Athol Bolleurs, Dylan Griffiths.
To contact the reporter on this story: Geoffrey Kapembwa in Lusaka via the Johannesburg bureau at +27- abolleurs AT bloomberg.net.
Labels: CHAMBER OF MINES, FREDERICK BANTUBONSE, MINES AND MINERALS ACT, MWANAWASA
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Tax: Mines counter-propose
By KASUBA MULENGA and ANGELA CHISHIMBA
MINING companies yesterday submitted their counter-proposal on the new tax regime in which they agreed on the three per cent mineral royalty but
objected to the 25 per cent windfall tax in preference to 12.5 per cent. But Secretary to the Treasury, Evans Chibiliti, said Government would look at the mines’ proposal but would go ahead to enact all the proposed bills on tax. And Government yesterday presented the Mines and Minerals Development Bill to revise the law relating to mining and processing of minerals.
Submitting the counter-proposal to the parliamentary expanded committee on estimates and revenue, Chamber of Mines of Zambia general manager, Frederick Bantubonse, said the mines would only accept the introduction of either the windfall tax or variable profit tax and not both.
But Mr Chibiliti, who was accompanied by Ministry of Finance and National Planning permanent secretary for budget affairs, Emmanuel Ngulube, said cabinet had already directed him to start implementing new tax measures starting on April 1 this year.
He said the decision to come up with a new mining tax regime, was made by Cabinet and that neither he nor the Minister of Finance and National Planning, Ng’andu Magande, had the mandate to change anything.
“The mines should have faith and confidence in us because we have worked with them for a long time. We are not out there to destroy them but we mean well,” Mr Chibiliti said.
Mr Chibiliti said Government was aware that the mines had hired consultants who were making tax calculations for them and urged the mines to consider engaging their own accountants because they understood their operations well.
And when committee chairperson, Godfrey Beene, asked him about Government’s stance on the possible litigation the mines might take, Mr Chibiliti said Attorney-General, Mumba Malila, was ready to defend the tax regime in court.
“The interests of the people override the fear for litigation,” Mr Chibiliti said.
Earlier, Mr Bantubonse said although the mines agreed on the three per cent royalty, they, however, wanted it to be graduating between one and three per cent.
He told the committee that the chamber was against the proposed 30 per cent corporate income tax but wanted the current 25 per cent to continue.
And the mining industry being capital intensive, the chamber was against any changes to the capital allowance structure and recommended a continued reduction of 100 per cent of the capital expenditure during the year of incurrence to maintain viability of investments and companies’ ability to fund the same.
The chamber also objected to the proposal that withholding tax should be levied as indicated in the Customs and Excise Amendment Bill of 2008.
Mr Bantubonse said the levies should be deferred until sufficient smelting and refining capacity was successfully commissioned within Zambia that could process the entire quantities of concentrates, reverts, copper, mattes, unrefined copper, copper waste and scrap.
When Patriotic From member of Parliament for Lusaka Central, Dr Guy Scott, asked why the chamber had made a counter proposal late, Chamber of Mines president, Passmore Hamukoma, said they did not have enough time to meet all their members.
Mr Hamukoma said the proposals submitted to the committee did not reflect all mine owners’ views because some of them could not agree with them.
And REBECCA CHILESHE reports that Government will not officially inform mining companies that there will be no re-negotiation on the proposed tax regime but will compel them to pay in accordance with the new law.
Mr Magande, said this in Parliament on Thursday when he was winding up debate on the budget allocation for his ministry.
He said when the Mines and Minerals (Amendment) Bill of 2008 is passed, Government would, apart from compelling the mine owners to pay the new tax, also be able to track the accounts and other monies being made by the mining companies.
Mr Magande was answering a question from Mufulira MP Marjory Masiye (PF) who wanted to know whether Government had written to the mining companies informing them that it would not re-negotiate the proposed taxes.
“There is no need for us to put it in writing that there is no room for re-negotiations with these mining companies. We do not have to remind any tax-payer to pay their taxes because they are supposed to abide by the law,” he said.
Meanwhile, Minister of Justice, George Kunda presented presented the Mines and Minerals Development Bill to revise the law relating to mining and processing of minerals.
The 2008 amendment bill would repeal and replace the Mines and Minerals Act of 1995.
The bill would be tabled in Parliament for second reading next week.
And Government also presented an excess expenditure Appropriation Bill to approve a supplementary budget amounting to K83, 341, 135, 177 which was required for services during the financial year ending 2005.
Mr Magande presented the bill.
The Speaker of the National Assembly, Amusaa Mwanawasa, referred the bill to the committee on estimates.
Labels: EVANS CHIBILITI, FREDERICK BANTUBONSE, GODFREY BEENE, MAGANDE, WINDFALL TAX
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Chamber of Mines nods Levy’s tax indaba
By NKWETO MFULA
THE Chamber of Mines has accepted President Mwanawasa’s invitation to discuss with Government over their concerns on the newly introduced mine tax regime so that misunderstandings can amicably be resolved. General manager, Fred Bantubonse, said yesterday in an interview in Ndola that the mining companies were ready to meet Government to advance their concerns on the new mine tax regime.
“The mining companies are more than ready to meet with Government; that was the reason why we had gone public on the issue,” he said.
Mr Bantubonse said the mining companies had earlier requested for a meeting with Government, which, however, did not materialise. He said the mine development agreements did not only include tax issues but other concerns, such as environmental and local community projects. Mr Bantubonse also refuted allegation that the Chamber of Mines was a cartel for mining companies. He said each sector had its own chamber to look into in the mining sector.
“The chamber represents the interest of the mining companies just like any other association,” he said.
President Mwanawasa has invited mining companies opposed to the proposed tax regime to seek audience with Minister of Finance and National Planning, Mr Ng’andu Magande and Minister of Mines and Mineral Development, Dr Kalombo Mwansa.
Dr Mwanawasa said the mining firms should be prepared to explain to the government why they were not happy with the proposed increase, which was for the benefit of Zambians.
He said mining taxes in Zambia were still the lowest as compared to other countries whose taxes were between 40 and 53 per cent.
The President said Government was just asking for a fair share of the resources to improve the living standards of the ordinary Zambians and that he still could not understand the criticism.
Labels: CHAMBER OF MINES, FREDERICK BANTUBONSE
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Bantubonse urges govt to honour contracts
By Fridah Zinyama
Wednesday May 23, 2007 [04:00]
CHAMBER of Mines general manager Frederick Bantubonse has said the government should honour the development agreements despite calls from stakeholders to review the contracts. There have been calls from different stakeholders for the government to review the mining contracts signed with the mining houses, as Zambians were not benefiting from their resources.
Appearing before the parliamentary committee tasked to look at economic issues chaired by Kabwata member of parliament Given Lubinda, Bantubonse said the mining houses should be given enough time to realise profits from their investments as mining was a long-term business.
“We would like to reiterate that mining is a long-term business and that government efforts should be directed towards growing the economy,” he said.
Bantubonse said when the economy grew, the benefits would reach the people. “The investment that has been coming into the mining sector since 2000 has gone into plant rehabilitations, expansions and new production facilities,” he added.
Bantubonse said the Zambian Income Tax Law allowed for capital allowances and carrying over of tax losses. “The effects of these two items has accounted for the mining sector’s low contributions to government treasury during this capital intensive period,” he said. “Thus as soon as these carry over losses and capital allowances are liquidated the mining companies will be in a tax paying position.”
He said the mining companies’ contribution to the treasury would then be enhanced. Last week, a World Bank adviser Paul Collier said the government had made a tactical error in imposing a tax-free-regime on the copper industry and should quickly impose a windfall tax so that the people of Zambia could benefit from their resources. Collier said the government should quickly impose a windfall tax before the boom in copper prices subsided.
Labels: CHAMBER OF MINES, FREDERICK BANTUBONSE, MINING, MINING CONTRACTS, WINDFALL TAX
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