MINISTER of Finance and National Planning Situmbeko Musokotwane says the government’s shift towards moderate mining taxes is to revitalise copper production and bolster investor confidence.
Dr Musokotwane clarified that no tax breaks were offered to mining companies, but rather a tax structure aligned with global mining standards.
He explained that previously, excessive taxes under the prior administration had deterred investment,
Speaking during a public forum organised by News Diggers in Lusaka last Friday Dr Musokotwane said mining was not attractive during the PF because of excessive taxes.
“The saying that we have given incentives for mining taxation we’ve not. All we have done is to align our taxes in Zambia with what other mining countries do,” Dr Musokotwane said.
“Ours were way out there….., We cannot have excessive taxes when everybody else is somewhere.”
He said taxes ought to be normalised to attract investment.
“Those companies that had threatened to leave like first quantum they are back in production, Lumwana they have not left they are expanding. Mopani is back in mining and as we speak there are a number of new mines that have come in which will be evident by 2026-27 by that time we will be close to 2.85 million of copper tonnes,”Dr Musokotwane said.
“Our colleagues in the PF increased the taxes, did the copper production increase ? It went down in fact two mines closed.”
In responding to ZICA president Yande Siame Mwenye who proposed for the enforcement of windfall tax Dr Musokotwane said sur-taxes still exist but government was focused on standardising its taxes with other mining companies upon doing benchmarking.
He said the citizenry have to suffer hardships momentarily as the UPND government works tirelessly to dismantle the debt that the PF had plunged the country into.
“If you accumulate excessive debt, there comes a time when you must pay and when that time comes to pay one way or another we the citizens are going to feel it,” he said.
“We were walking with a stamp on our backs as Zambians which Stamp was defaulters. Here in Zambia we take it lightly that you can borrow and disappear or you keep quiet and see that as normal. Colleagues the rest of the world does not operate like that.”
He said his government had to think of how the debt would be repaid by restructuring it without overtaxing the citizenry.
“The debt restructuring has prevented the bigger catastrophe were the Kwacha would have been 50 percent against the dollar,” said Dr Musokotwane.
“The key is to grow the economy and become bigger.”
Economic Association of Zambia (EAZ) president Oswald Mungule proposed that government collaborated with the IMF to restructure the remaining debt with the debt for climate and nature swap instruments.
“Government should continue to reduce its borrowing appetite for local debt instruments and thereby release more liquidity into the economy for the private sector,” Mungule.
CSO Debt Alliance Chairperson Fr Alex Muyebe urged government to reduce the budge gap and increase on domestic revenue by ensuring prudent use of resources.
“The focus has been on external debt but our challenge is to deal with domestic debt that has been rising,” said Muyebe.
Mwenye who proposed for the re-introduction of windfall tax proposed that some agreements on sur-taxes need to be scrapped off as they are not proving their relevance.
“We need to broaden the taxes. In 2008 there was windfall tax it worked but in 2009 we didn’t have it. We need to go back to the drawing board we need to look at that tax,” she suggested.
“Let’s take a step and look into the future, we are here fossil fuels will no longer be the thing times are changing, we have electric vehicles. What’s on demand? Our copper and we are one of the largest producers on this continent. Can we bring back that windfall tax.”
She wondered why the climate sustainability Bill has not been enacted.
“When implemented we can get carbon taxes that we can put into our sinking funding and start preparing for that repayment that we are looking to in future.
We can tax the mine not just for the pollution, we can tax the manufacturing industry, we can even go to financial and insurance institutions. We have carbon hydration agreements but are they relevant?,” she questioned.
“We have a lot of double taxation agreements but are they relevant? We have agreements since 1950 were the tax that is paid on royalties, interest or withholding tax is 5 percent Maybe it’s about time we cancel them so that we can claim 20 percent that we can put in the sinking fund.”
She further proposed that qualified accountants be placed in constituencies to manage the Constituency Development Fund (CDF) to curb the mismanagement of public resources.
By Mwaka Ndawa
Kalemba May 6, 2024.
