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New mineral tax will enhance tax collection – mines body

THE Zambia Chamber of Mines (ZCM) has insisted that the proposed mineral royalty tax regime will enhance tax collection.
Government has proposed to implement three percent and six percent bands as the floor and ceiling tax rates pegged to the value of minerals on the London Metal Exchange.
This development will remove the mineral revenue sharing mechanism from the Mines and Minerals Act of 2015 that was used to apply tax regime of six percent for underground and nine percent for open cast mining operations.
Reacting to a consortium of civil society organisations that advised Government not to implement the proposed tax regime on the grounds that it is “investor-led” and will not maximise revenue during commodity price booms.
ZCM president Nathan Chishimba said Government recognised the need to balance increased tax revenue with continued employment and investment in new mining ventures.
The civil society include the Zambia Tax Platform and Publish What You Pay campaign, among others.
“One cannot separate mining tax revenue from mining investment, because it is the mining investment which ultimately produces the tax revenue. A good tax is one which balances these two competing objectives,” Mr Chishimba said.
Mineral royalty tax is based on production, and not profit.
“It is pegged at a relatively low rate, and is not designed to maximise revenues in times of commodity price booms. Governments collect most of their revenue in times of commodity price booms from profit-based tax, which is much higher,” he said.
Mr Chishimba said Government is on the right track with the proposed tax regime, and urged civil society to view it in the larger perspective of ongoing investment, employment and economic development.
“One has to balance taking as much as one can now with having a thriving industry into the future and the government has very sensibly recognised this,” he said.