New mining tax too low, says NGO


By Nation Reporter

THE Zambia Tax Platform (ZTP) has maintained that the Chamber of Mines proposed mineral royalty tax bands are retrogressive and that they will compromise mineral resource revenue collection in the country if allowed.

Assistant coordinator of the Publish Water You Pay Zambia, Mtwalo Msoni, whose organisation is a member of the ZTP, told the Daily Nation yesterday that the Chamber of Mines was ‘‘misguiding itself’’ on the new mineral royalty.

Mr. Msoni said there was need for sound legislation that would sustain the mining sector if the country was to continue promoting investor confidence by making decisions that were all-encompassing and not one-sided.

He challenged Government to justify and disclose to the public the tax revenue that will be lost through the implementation of the new sliding mineral royalty tax regime as opposed to the double tier regime of 6 percent for underground and 9 percent for open cast mining as legislated in the 2015 Mines and Minerals Act.

He noted that while mineral royalty tax was meant to be a compensation for mineral resource extraction, the new tax bands would not enhance revenue collection for compensation in times of commodity booms which subsequently lead to increased production in the mining sector.

He said the proposed mineral tax bands were too low as compared to the value of the commodity on the London Metal Exchange, adding that the proposal did not reflect the interest of Zambians.

“We, the civil society, maintain and restate our position that the proposed mineral royalty tax bands are retrogressive and will surely compromise mineral resource revenue collection. We also affirm that resources should be left in the ground for exploitation by future generations if current regulations are deemed too onerous by potential and current investors.

“We wish to re-emphasise the we are in total support of having progressive tax reforms in the mining sector. However, the proposed tax bands as the floor and ceiling tax rates pegged to the value of the mineral on the London Metal Stock Exchange are too low, investor-led and do not represent the interests of the Zambian people in getting a meaningful compensation share for mineral extraction,” Mr. Msoni said. He said it was ‘‘immoral’’ for a country with high levels of poverty and inequality to continue to make decisions that compromised its ability to generate its own resources and address its challenges domestically.

He lambasted Chamber of Mines president Mr Nathan Chishimba for allegedly claiming that civil societies’ reasoning on mineral resources was “short-term thinking” as mineral resources were finite, arguing that Zambia needed to make the most of what it had while it lasted.

“We wish to remind Mr. Chishimba that Zambia has been mining for over a century and evidently, the country has not been able to make the most of resource post privatisation,” he said.

He said the civil society had committed themselves to research on the impact of current tax regimes and campaign for reforms at the national and international level to ensure that the ‘‘taxing rights of our countries were not undermined by abusive international tax practices and investors’’.

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