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Chikwanda canes mining tax critics

KALONDE NYATI and CAROLINE KALOMBE, Lusaka
MINISTER of Finance Alexander Chikwanda has called on various stakeholders in the country to explain the importance of the new mining tax regime and avoid misleading the public.
“People, especially those who are hired, are very vocal about the tax regime and are not explaining the other part,” he said.
The new mining tax rule announced in the 2015 national budget will be effective on January 1.
Mr Chikwanda said it is important for stakeholders to clearly explain the new changes in the mining tax administration to the public instead of attacking Government on the new policy.
The minister said this in Lusaka yesterday during the First National Bank (FNB)-sponsored post-budget discussion.
In the 2014 national budget, Government intends to redesign the mining fiscal regime by replacing the current two tier system with a simplified one.
The new system will make underground mining operations to pay eight percent mineral royalty while open cast mining will pay 20 percent mineral royalty, resulting in a revenue generation of about K1.7 billion.
The new system will also see mines pay 30 percent corporate income tax on revenue earned from processing of purchased mineral ores, concentrates and other semi -processed minerals, currently taxed as income from mining operations.
Mr Chikwanda said Government desires to run a budget that will not exceed 4.6 percent of the Gross Domestic Product (GDP).
“Our desire in 2015 is to run a budget not exceeding 4.6 percent of the GDP. One of the reasons we are not developing as a country is that we are spending more than what we have and we have decided that going forward, the budget deficit will not be allowed to exceed 4.6 per cent. We want to avoid fiscal indiscipline at all cost,” he said.
Mr Chikwanda said like a household, a country needs to spend within its budget as failure to do so will have negative effects.
The minister also said Government wants to reduce dependence on external borrowing.
“We cannot outsource responsibility for the development of our country, we have to tighten our belt,” he said.
At the same function, FNB economist Alex Smith hailed the 2015 national budget, describing it as a prudent and development oriented one.
And in a statement, Zambia Revenue Authority (ZRA) Commissioner General Berlin Msiska said the  changes  to  the  mining  tax  regime  will  only  apply  to  mining of  industrial  minerals.
He said customs  duty  of  five  percent  on  aviation  fuel has been removed which is aimed at reducing  costs  in  the  aviation  sub-sector.
Excise  duty  on  un-denatured  spirits  of  alcoholic content of 80 percent or higher,  by volume, has been increased from  zero  percent to 125  percent.
This is aimed at restoring  the  collection  of  import  excise duty  on  imported  un-denatured  spirits  of  alcoholic  content  of  80 percent  or  higher,  by  volume,  when  imported  by  unlicensed importers.
Dr Msiska also said excise  duty on  un-denatured  spirits  of  alcoholic content of 80 percent or higher, by volume, to zero percent, when  imported  by  a  licensed  excise  manufacturer has been suspended.
“This  measure  is  intended  to  support  the  growth  of  the  local manufacturers  of  potable  spirits,” he said.

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