Editor's Comment

Mines should embrace new tax regime

Barrick Miners

THE 2015 national budget announced by government was undoubtedly drawn up with the aim of growing the economy and alleviating poverty.
Among the plans Government has laid out as a way of growing the economy is to increase the mineral royalties payable by the mining companies operating in Zambia.
In the budget speech, Minister of Finance Alexander Chikwanda announced Government’s proposed replacement of the current two-tier mining fiscal system by a  simplified mining tax structure.
The redesigned mining tax structure includes an eight percent mineral royalty for underground mining operations as a final tax, a 20 percent mineral royalty for open cast mining as a final tax, 30 percent corporate income tax on tolling income, and a 30 percent corporate tax rate on income earned on processed purchased mineral ores, concentrates and other semi-processed minerals.
We have no doubt that the redesigning of the mineral tax regime for the mine companies has been done in good faith and in order to provide for a more equitable distribution of Zambia’s mineral wealth between the mining companies and the Government.
One of the intentions to note is that Government wants to help the mining houses be transparent in their operations but better still, it is the desire of Government to equitably distribute wealth from the mines.
The diversification of the economy is a long-term plan which will not bear fruit just now. That is why Government has continued to depend on the mining operations to raise revenue through taxes.
We take cognisance of the concerns raised by the Chamber of Mines over the new tax regime but we wish to state that all the players and stakeholders in the economy were given an opportunity to make proposals and government is now implementing the outcomes of a consultative process that did not begin today.
Government is aware that the mines operating in Zambia and those that wish to set up new companies in Zambia need to invest and we believe there is no way it can take measures that will hurt further economic growth.
We know that the principal aim of anyone setting up a business is to make a profit and those profits should be made in a transparent manner. And these profits should be shared equitably.
Further, considering that 75 percent of the 2015 budget is expected to be financed from domestic revenue, government has to improvise other measures of meeting its target.
When Government came up with the new tax regime, it had in mind that it has its stake, in this case, the employees in the mines and these are its important asset.
When imposing taxes against the mines, Government does so under the consideration that the mines are major players in the economy of Zambia and it is undeniable that anyone in that position has to do their part in the economy.
It is in this vein that the mine owners should work together with Government in the equitable distribution of the mineral wealth and for the development of the nation.
We hope mining houses can embrace the new tax regime and contribute to national development.

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