"Zambia must improve mine revenue collection"
By Kabanda Chulu and Misheck Wangwe
Tue 16 Oct. 2012, 11:10 CAT
ZAMBIA will not get meaningful benefits from the mining sector unless revenue collection is improved to create a mineral resource stabilisation fund that can be used to develop other economic sectors, says Dr Mathias Mphande.
And information permanent secretary Amos Malupenga has advised newsroom managers in the SADC region to encourage specialisation so that journalists can highlight other issues beyond politics.
Speaking yesterday in Lusaka at the Southern Africa Resource Watch (SARW) regional media training on how to report on extractive industries, Dr Mphande from the University of Zambia said there was poverty in countries with mineral wealth.
"How to benefit from the mining sector depends on choices you make as a country and mining is capital intensive and requires sufficient investments which can take the entire government funding if nationalisation is put in place. So since mining capital is mainly foreign, the only linkage the mines have on the local economies is through taxes," Dr Mphande said.
"So government should find ways of maximising revenue collection from the mines. But even when taxes are captured effectively, governments and its civil servants spend these monies in a greedy manner such that the social welfare of the people is not improved.
What can Zambia show for the huge taxes the government gets when patients are still sleeping on the floor at UTH and university students are still squatting and learning with few teaching aids, yet advocates of better taxes are called 'lunatics' by government officials."
He observed that countries rich in minerals usually showed poor economic indicators.
"Kenya, which predominantly doesn't produce minerals, has better economic indicators than Zambia, and Peru, which is rich in minerals, is poor compared to Brazil, a non-mining country, while Ivory Coast doesn't have minerals, but its economy is better than oil-producing Nigeria," said Dr Mphande.
And SARW director Claude Kabemba said the media should start telling stories about the extractive industries.
"The local media has not articulated problems faced in this sector and most stories written about the industries are products of external influence," he said.
And Malupenga said the media cannot educate and inform people if they were not well informed themselves.
"There is tendency to cover more of politics because it is easier, but journalists should diversify their thinking and go beyond politics and this training is also a reminder to newsroom managers across the region on the need to encourage specialisation so that journalists can report issues with depth, fluency and authority," said Malupenga.
Labels: AMOS MALUPENGA, MATHIAS MPHANDE, MINING, NEOCOLONIALISM, TAXATION, WINDFALL TAX
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COMMENT - Also check the comments on the Zambian Economist blog,
"PAYE Is Not A Mining Tax".
FQM claim dismissed
August 9, 2012 | Filed under: Business | Posted by: web editor
By NANCY MWAPE
GOVERNMENT has dismissed claims by First Quantum Minerals (FQM) that Zambia has the highest fiscal regime for the mining sector globally,
challenging the company to substantiate its claims with reputable publications. Deputy Finance Minister Miles Sampa says Government is working with the Zambia Revenue Authority to ensure that there are no income leakages from the mines.
Mr Sampa was reacting to
FQM’s head of tax Adam Little who, in an interview with Daily Mail this week, stated that the tax rates applicable to the mining industry in the country are
the highest in the world.
In an interview, Mr Sampa said a holder of a mining right is exempt from customs, excise and value added tax duties in respect of all machinery and equipment required for exploration or mining activities.
“Mr Little sounded more of a politician than an expert. His claims are unsubstantiated and as an expert in tax he should be factual,” he said.
Mr Sampa said mining companies should not claim pay-as-you-earn (PAYE) as part of their taxes as this is paid by workers.
[That kind of claim by the mines is infuriating, and shows their tendency towards tax evasion. All their money comes courtesy of the Zambian people, who own the copper in the first place. It are the end users who actually pay for everything, not the mines, not anyone else. - MrK]
In a separate interview, University of Zambia, School of Mines lecturer Mattias Mphande said mining companies should open up their books for public scrutiny. Dr Mphande said Zambia’s taxes are the lowest compared to other mining countries such as Australia, Canada, Botswana and Namibia.
He said Zambian mines enjoy 10 years tax holiday, 100 percent capital allowance as an investment incentive, reduced customs duty on heavy fuel oil from 30 to 15 percent. Dr Mphande said Zambia’s tax is very low compared to Australia that has introduced a windfall tax at 40 percent.
“The mining sector’s contribution to treasury is very low in totality, they pay low electricity rates. If they import fuel, it’s duty free while Zambians pay excise duty,” he said.
Dr Mphande said the wages and salaries paid to Zambian mine workers are very low compared to the Democratic Republic of Congo and Malawi.
“PAYE is tax paid by workers and when this is removed from their tax bracket, the mines contribute very little to the treasury,” he said.
He said it is sad to note that in all places where mining activities have taken place in Zambia citing the Copperbelt and now North Western provinces, people are poorer compared to places where there are no minerals.
Labels: FIRST QUANTUM MINING, MATHIAS MPHANDE, MILES SAMPA, PAYE, WINDFALL TAX
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Rupiah should apologise over his tribal politics - Mphande
By Florence Bupe
Mon 08 Nov. 2010, 03:59 CAT
PRESIDENT Rupiah Banda is creating a frightening political scenario by promoting tribal and regional politics, Alliance for Democracy and Development (ADD) vice-president Dr Mathias Mphande has said.
Commenting on President Banda’s recent tribal campaigns in Eastern Province where he appealed for votes next year because he hails from the area, Dr Mphande said it was retrogressive for the national leader to promote regional politics in this day and age.
“It is very disappointing for Zambians who supported President Banda to ascend to office that he should be practicing tribal politics. I personally supported him in the last elections because he was seen to be capable of taking the country forward and promoting unity, but he has departed from doing these things,” he said.
Dr Mphande said President Banda owed Zambians an apology for his tribal politics, which he warned had the potential to tear the country apart.
“Rupiah should apologise to the Zambian people for hurting their feelings. He thinks he can be predominantly supported in his region and has, therefore, sidelined people in other parts of the country,” he said.
Dr Mphande charged that those supporting President Banda’s tribal campaigns were “bad eggs“ and should not be allowed to divide the country. He said the country would be marred with confusion if other political party leaders had to start behaving like President Banda.
“How will Rupiah react if HH (Hakainde Hichilema) went to Southern Province and told Tongas to vote for him because he comes from there, or if Sata went to Northern Province and did the same? This country would be filled with divisions and anarchy,” he said.
Dr Mphande further said President Banda had failed lamentably to address the high levels of corruption in the country. He charged that President Banda had departed from the fight against corruption and that is why he was in support of the removal of the abuse of office clause from the Anti Corruption Commission (ACC) Act.
Meanwhile, Dr Mphande observed that government was adamant on the issue of the windfall tax because government officials are ignorant.
“What we are seeing is simply foreign mining firms blackmailing an ignorant and timid government. It is not right to suggest that low taxation and tax exemptions are what are attracting investors into the mining sector,” said Dr Mphande.
Labels: MATHIAS MPHANDE, RUPIAH BANDA, TRIBALISM
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Govt’s failure to collect taxes from the mines is a scandal – Dr Mphande
By Salim Dawood
Fri 17 Sep. 2010, 04:01 CAT
UNIVERSITY of Zambia economics lecturer, Dr Mathias Mpande has charged that it is a great scandal by the Zambian government to fail to collect what is due to the nation in terms of taxes from the mining sector.
And Dr Mphande, a former deputy mines minister, has said Zambia Revenue Authority (ZRA) will not recover the K 8.3 billion mining royalties’ deficit by the end of the year because it has no competent staff to handle the mines.
In an interview with Post Online over ZRA’s revelation that there was an K8.3 billion deficit in mineral royalties collection which it said will recover by the end of the year, Dr Mpande said it would impossible for ZRA to recover the K8.3 billion deficit in mineral collection royalties by the end of the year.
He said the deficit was because the mining companies were not paying as much royalties as they were supposed to pay.
“The mining companies as far as am concerned are transfer pricing, there is also rampant tax evasion and ZRA are not up to the mark to audit the mining companies’ books so that they can have a realistic assessment of what is due,” he said.
“ZRA has just got to be capacitated and employ competent people who are competent in mining taxation. The current people they are employing people who have probably just done administration and economics.”
Dr Mphande said ZRA should employ people who have basic understanding of the mining industry so they could competently deal with issues of tax in the industry.
He said studies in economics and administration were not sufficient for ZRA staff to asses what the mining companies were doing.
“They (ZRA) should employ people who are competent from mining areas as well and train them into accountancy and taxation,” Dr Mphande suggested.
He observed that ZRA officials would not understand how mining companies generate their revenue and how they conceal their costs.
And Dr Mpande has also observed that government was under taxing mining companies describing the situation as scandalous.
He said the government was doing the country a disservice by covering the mining companies from paying the appropriate tax.
“That is a scandal as far as am concerned, the Zambian government is not doing the country a service, we are not getting what is due from our resources and that I have said on several occasions and that is true and it is increasingly getting worse,” he said.
He said the Zambian mining industry was the only industry that was large enough for the country to get revenue that would meaningfully contribute to tangible economic growth and development.
“Now if you have a government or administration that insulates the mining industry for a successive period of 10 to 15 years as if it’s a golden egg, where else can GRZ get money?” Dr Mpande questioned.
He said government was instead stifling business prospects for Zambians that were in business.
“Now they are stifling people who are brewing Chibuku and people who are making soft drinks that’s where they go and get the money (taxes)… they are even getting money from companies that are producing food like mealie meal, that is not good,” he said.
Dr Mphande said the situation was caused by lack of understanding of how an economy would grow from the utilization of its country’s resources.
He said the Zambian economy was mine based and it was largely through mining that the country’s economy could grow and facilitate development.
He said the low tax that government had allowed the mining companies was encouraging the mining companies to continue “abstaining” from what they were supposed to do.
“They are supposed to upgrade minerals and add value but as a consequence of this government is not adding value,” he said.
Dr Mphande said the level that the of skills and development the country had gotten to, Zambia should have been exporting not less than copper cables, transformers and other finished products.
“Its not possible (for ZRA to recover the K8.3 billion deficit), the mining companies are contributing negatively to the country’s revenue, instead of paying, they sometimes get refunded via VAT (Value Added Tax), a situation that they don’t even contribute, somebody who doesn’t pay tax gets money from you, can you see that as sensible? That is what is happening to ZRA,” said Dr Mphande.
Labels: CORRUPTION, MATHIAS MPHANDE, MINING, WINDFALL TAX
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