‘Govt should reveal mine tax terms’
By Chiwoyu Sinyangwe
Thu 02 Dec. 2010, 03:59 CAT
THE government should disclose the terms under which it has agreed the new tax regime with the foreign mining firms, says the Economics Association of Zambia. Last week, finance minister Dr Situmbeko Musokotwane announced that the government had reached a deal with foreign mining companies whose long-term agreements the government had cancelled in 2008 to introduce higher taxes.
Dr Musokotwane said mining companies agreed to pay taxes based on the current tax regime and to pay K413 billion more in tax arrears than estimated in the 2011 budget.
EAZ president Noel Nkoma said the failure to disclose the contents of the agreement raised suspicion among key stakeholders.
“For the purpose of transparency, the government should be able to come out publicly and say we engaged the mines…” Nkoma said.
He warned that the lack of transparency might lead to a repeat of the one-sided Developmental Agreements (DAs) which suffocated the country’s ability to raise mining tax revenues even in face of record high metal prices.
“As EAZ, we equally share concerns that have been raised by various interest groups,” Nkoma said.
“What we are interested in as Zambians is we want to see the things that have been adjusted in the tax regime. Which taxes have they adjusted? Is it the mineral royalty or what other interventions they are able to put in place to realize equitable deal.”
Nkoma said there was room in the current structure to raise mine taxes without stifling growth of the country’s mainstay. He said given the current copper prices, Zambians could benefit more if the government increased the revenue from the mines.
“In no way are we suggesting that we should be able to suffocate the mines to a point whereby they are not able to operate profitably,” said Nkoma.
Labels: DEVELOPMENT AGREEMENTS, NOEL NKOMA, WINDFALL TAX
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EAZ urges govt to re-visit windfall taxes
By Fridah Zinyama
Sat 09 Oct. 2010, 13:50 CAT
ECONOMICS Association of Zambia (EAZ) president Noel Nkoma has urged government to re-visit the issue of windfall taxes, saying government is losing out on revenue collection from the mining sector through the lack of re-introduction of this tax regime.
Copper has now reached a high of $8,285 per metric tonne, the highest level since the beginning of this year.
The high copper prices have again spiked the debate on whether government should re-introduce the windfall so that the country could benefit from the high prices of the red metal on the international market.
Commenting on the 2011 national budget presented to Parliament by finance minister Dr Situmbeko Musokotwane on Friday under the theme ‘A people’s budget, from a people’s government”, Nkoma said government had made no mention on whether they would re-introduce the windfall, an omission which was very costly to the country.
“Government should have just mentioned even the intention to resolve the windfall tax issue but they have remained silent over this very important issue,” he said. “It’s not too late to make amends on the windfall tax now that prices are high again.”
On the K43 billion which has been allocated to the Ministry of Agriculture for irrigation, Nkoma said the amount was not enough to adequately deal with the issues which might arise due to the effects of climate change.
“With the way the weather pattern has been changing, it is important for government to take issues of improving the irrigation system in the country so that we can reduce dependence on rain for crop production,” he said. “We should not take the bumper harvest that we have produced this year for granted, the weather can change and therefore affect maize production for the coming years.”
Nkoma said it was therefore important that government increased the allocation to irrigation so that the country reduced its dependence on rain for crop production.
On the reduction on budget support from the donor community from 14.5 per cent to 7.7 per cent, Nkoma said it was a welcome move which showed that the country’s economy is growing hence its ability to look after itself was improving as well.
On the budgetary allocation of K12.8 billion to the Ministry of Tourism for marketing Zambia’s tourism sites, Nkoma said the amount should have been increased to deal with issues of re-stocking of game in the national parks.
“Government has allocated enough funds for the building of roads and bridges in next year’s budget, will lead to an increase in tourists coming to visits Zambia,” he observed. “But the problem is that there is not enough game in the national parks across the country hence the need for money to re-stock.”
Nkoma said government was shooting itself in the foot by not allocating enough funds to deal with game re-stocking in next year’s budget.
And Millers Association of Zambia (MAZ) chairman Peter Cottan has expressed happiness with government’s decision to increase the PAYE exempt threshold by 25 per cent from K800, 000 to K1 million per month.
Cottan said the increased PAYE exempt threshold would put more disposable income in people’s pockets.
[Not necessarily. The reduction of PAYE is pretty much offset by the borrowing of $500 million, which is a burden on the Kwacha and results in worse exchange rate, which means higher prices for imported goods in the shops. The government sees a reduction in donor funds, and their answer is: let's borrow half a billion US dollars. - MrK]
“By taking so many workers out of the tax bracket, more people will have disposable income in their pockets to spend on the other things,” said Cottan.
In next year’s budget, the proposed PAYE system is: from K1,000, 000 and below- zero per cent; K1,000,000 to K1,735,000 per month- 25 per cent, K1,735,000 to K4,200,000 per month - 30 per cent and above K4,200,000 – 35 per cent.
Dr Musokotwane said government would further provide relief by increasing the exempt portion of income paid at termination of employment from K25 million to K35 million and increasing the tax credit for differently-abled persons from K1.92 million to K3 million.
And Cottan commended government for allowing agriculture to remain a priority in next year’s budget.
Labels: EAZ, NOEL NKOMA, PETER COTTAN, WINDFALL TAX
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Finance Bank, Credit Suisse deal to increase investment capacity
By Kabanda Chulu
Fri 22 Jan. 2010, 04:01 CAT
FINANCE Bank yesterday stated that its partnership with Credit Suisse of Switzerland will enable the bank to increase its capacity in investment banking and structured finance to support its regional banking strategy.
And Finance Bank executive director for corporate banking Noel Nkoma has said the bank will this year list a substantial percentage of shares at the Lusaka Stock Exchange (LuSE).
Commenting on the International Financing Review award given to Credit Suisse, which has a 40 per cent stake in Finance Bank, Nkoma said the development affords the bank an opportunity to support its regional banking strategy of establishing branches in DR Congo and Zimbabwe.
He said the International Financing Review, which was an investment banking magazine, has recognised Credit Suisse as 2009 Bank of the Year, for having successfully come through the most ‘turbulent’ period in recent history for the financial markets’ sector.
“Credit Suisse owns 40 per cent in Finance Bank and this positive development will help us leverage our regional expansion strategy of establishing branches in DR Congo and Zimbabwe and this partnership will enable us increase capacity, both in investment banking and structured finance,” Nkoma said.
According to the International Financing Review, that Credit Suisse has come through the biggest economic downturn in 80 years intact thus enhancing its reputation and business acumen.
“This bank is client focused with capital efficiency strategies and has emerged from the financial crisis with some of the best financial ratios in the industry and with a high return on equity and its decisive actions dealing with illiquid assets,” it stated.
The Bank of the Year award falls on the heels of Credit Suisse after being recognised as the best investment bank by Euromoney in July 2009 and best private bank by Euromoney in January 2010.
And Nkoma said Finance Bank had already decided and would go ahead to list shares at the Lusaka Stock Exchange later this year.
“Listing at LuSE is a priority and will be done this year preferably by June and a substantial percentage of shares will be offloaded though I don’t have exact figures since our financial report is not yet out and shareholders are yet to meet and decide the number of shares to be given out to the public,” said Nkoma.
Labels: BANKING, CREDIT SUISSE, FINANCE BANK, LUSE, NOEL NKOMA
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Nkoma fears for economy
By Joan Chirwa
Tuesday July 31, 2007 [09:52]
THE government’s decision to withdraw its money from commercial banks is going to have detrimental effects on the economy, Economic Association of Zambia (EAZ) treasurer Noel Nkoma has warned. Nkoma, who is also director of marketing and public relations at Finance Bank Zambia Limited said the decision was likely to trigger an increase in lending rates, which had over the past months reduced considerably.
“There is likely to be a credit crunch for the simple reason that if you move resources from commercial banks, two things are going to happen. The first thing is that there will be no surplus cash for out-lending to the productive sectors such as agriculture, small and medium-scale entrepreneurs (SMEs) and manufacturing, worse still for consumer or personal loans,” Nkoma said. “There is high demand for borrowing in this country and that is the reason why banks have been bringing down interest rates. So in the absence of cash in banks, interest rates will start going up again and in the process, they are going to hurt productive sectors of this country.”
Finance and national planning minister Ng’andu Magande earlier this year announced that the government would withdraw its money from commercial banks because it was borrowing the same money at high interest rates.
He said the money would therefore be channelled to the central bank.
And secretary to the treasury Evans Chibiliti also indicated that about K700 billion of government money was lying idle in commercial banks.
Chibiliti said withdrawing these funds was in the best interest of the government.
But Nkoma said: “The Economics Association of Zambia is deeply concerned by the withdrawal of government money from commercial banks. What we are hoping is to have the two stakeholders engaging in discussions in order to resolve the matter and come up with a win-win situation.”
Nkoma further warned of industrial failures as a result of reduced liquidity of banking institutions following government’s decision to withdraw its huge deposits in commercial banks.
“The industry will now be requiring double the amount of money being used now to feed into their production line. This is because cash will not be readily available and we will have a cycle of industrial failures which is basically liquidation,” Nkoma said. “All the progress made by the country will be stagnant. Government is the key player in the economy and if it decides to take its money from commercial banks, then there will be no economy. The solution is not to withdraw cash from commercial banks and take it to central bank because it doesn’t have branches around the country. What spurs production is consumer demand and if the consumer law is taken out, then there will be no demand.”
Nkoma however said the government was raising a valid point to withdraw its money from commercial banks because it was borrowing its own funds, but noted that an agreement could be appropriate for the benefit of the economy.
“The solution is upon the commercial banks through the Economics Association of Zambia, the Bankers Association of Zambia and the government to sit and harmonize the discrepancies. At the end of the day, if that money is sitting in the commercial banks and being deployed into the economy through lending, government is then justified to ask for interest on that money so that there is a win-win situation,” Nkoma said. “The trend world over is that commercial banks are bankers of the government. Even in countries like South Africa, commercial banks handle government accounts. If the commercial banks do not have the liquidity, they will not be attracting clients to borrow. If consumer lending is high, then the economy is vibrant.
“What makes a strong economy today is consumer lending. Now this money, if taken to central bank will just be idle. The function of central bank is to ensure financial stability and ensuring that the banking sector is healthy and sound.
“The central bank does not interact with members of the public because it is a banker of last resort. It is a bank where commercial banks with liquidity problems can go and get financial help so that they can operate viably.”
Labels: BANKING, EAZ, NOEL NKOMA
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