New Mining Taxes?

From Zambian Economist Mon Feb 18 2013, 00:00:00

Finance Minister Alexander Chikwanda recently signalled that Government is considering introducing new "tax measures" in mining :

"...We will introduce measures and relook at the tax system in the mining sector. Our mining sector has not contributed much compared to the rest of the region. So we want to engage local experts and ensure we have the statistics on mineral production and exports, and then we will find modalities to effect new tax measures to increase revenue collection..."

I commend Mr Chikwanda for his honesty that we are losing out. As well as his latest signal that change is on the way. Two additional observations on his statement.

First, the suggestion is interesting - but remains vague. What are these measures? We need details not merely promises of more study. It is not theoretical physics. These are straightforward issues. The obvious option is increasing revenue based taxes e.g windfall taxation or raising mineral royalties perhaps to 10%. Profit taxes do not work. Alternatively explore an infrastructure based tax that can be ring fenced to be spent in mining areas - that would be a win-win proposal for everyone. And it would ease pressure on mining companies for Corporate Social Responsibility projects. Which are mere bribes against citizens demanding higher taxes and better pay.

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