Reintroduce windfall taxes-ADD

Opposition Alliance for Democracy and Development (ADD) president Charles Milupi has attributed the Konkola Copper Mine Plc and Vedanta Resources saga to government’s failure to reintroduce windfall tax.

And Mr Milupi has charged that the PF government through the ministries of mines, finance and the Zambia Revenue Authority (ZRA) should go into details and avoiding swallowing figures given by investors by reintroducing the windfall tax.

Speaking during Muvi TV Sunday programme “The Assignment” dubbed “KCM Saga, who is to blame?” Mr Milupi said windfall tax was the only solution which could ensure proper accountability of mines in Zambia.

“Windfall tax works throughout the world, it taxes the windfall gain and that is why the structure of the windfall tax we had here in Zambia was a very straight forward issue,” Mr Milupi said.

He said people who criticized windfall tax did not understand how system worked.

“I dealt with windfall tax in details at committee stage in Parliament, it looked at the average production cost on the mine,” Mr Milupi said.

He said the MMD government had settled for $1.50 per pound and latter decided to forget about the average production cost by looking at the high cost producing mines which was then producing at $2 per pound.

He said although $1.50 average production was not supported, it took into account the power, pumping of water, the explosives, labour, materials, and the machinery throughout the processes there is mining, concentrating, smelting and refinery among other components. “And they said the high cost producer would be $2 per pound and on top of it they said we shall then allow a 25 per cent margin profit on top of the high cost producer and they later took it to $2.50 per pound and said this is a stage at which windfall tax would trigger in.  “I have been one of those few individuals who have been giving pressure on Rupiah Banda administration when the cancelled the windfall tax immediately after succeeding late president Levy Mwanawasa, I stood firm in Parliament and said it was wrong. I continued with PF come into power but it also refused to reintroduce the windfall tax,” he said.

And the UPND has advised the PF government to reintroduce windfall tax.

UPND deputy spokesperson Edwin Lifwekelo urged PF government to take immediate steps that would address concerns of stakeholders if Zambia was to get any meaningful benefits from the exploitation of the country’s mineral resources.

“There is need for the PF government to increase an understanding of how best to deal with mining corporations which use blackmail and deceit in covering up costs of mining projects and equipment that are brought into the country resulting in mining firms not paying anything to government,” he said.

Mr Lifwekelo said the Ministry of Mines needed to be strengthened to have the capacity to adequately supervise the exploitation of the country’s mineral resources.

“The mines need well trained and highly experienced engineers and economists who were able to interpret feasibility studies of mining companies,” he said.

“ZRA must also monitor these mining projects and equipment brought in Zambia to avoid losing revenue through the so called hidden costs,” he said.