|Finance minister Dr
of Zambia (UNZA) economics lecturer Dr Mathias Mphande has said it is
foolish for government to postpone the development of the country by not
properly taxing the mining industry.
Commenting on finance minister Dr
Situmbeko Musokotwane’s declaration to Reuters that reduced donor support
towards the 2011
budget will not derail its implementation because government expected more
revenue from mine taxes, Dr Mphande said the minister was only
Dr Musokotwane made the pronouncement despite his own
announcement at a press briefing last Saturday that government had no intention
of re-introducing the 25 per cent mining windfall tax because that could force
some mining companies to close.
Dr Mphande said no country behaves the
way Zambia was behaving, observing that even DR Congo that was more chaotic than
Zambia taxed its mining industry better.
“Other than incompetence,
they—[government]—just don’t know the importance of taxation to development and
in relation to poverty-reduction, that’s all. They really don’t care for Zambia,
they care for their Chinese, Indians and foreign investors—they don’t like
Zambians. They are not working in the interest of the country for sure,” Dr
“But you put it on record, that is why our country is not
going to develop, it cannot develop on internal resources, our only internal
resource is valuable and proper taxation of the mining industry, without proper
taxation of mining companies, this country cannot develop and that is why it is
Dr Mphande said the mining industry was doing well in
the country, stating that reports of increase in copper production was real but
lamented that Zambians did not benefit from the development.
He said the
increase in production was not as a result of MMD efforts but as a result of
decisions that were made by people like him (Dr Mphande) in the 90s, that the
mines be wisely privatised.
“So it is just foolish for this government to
postpone development for our country by the unjust taxation system; whether its
windfall tax or royalties, what is important is that what we are collecting from
the mining industry is not fair for the country,” Mphande noted.
government was lying when it declared that there would be development in the
country because there were not enough resources to develop the country in the
absence of donor aid or competent taxation of the mining industry.
me tell you for the record, the Zambia revenue collection system is about 20 per
cent of GDP from taxes. The mining industry, which is over and above the whole
total economy, is contributing nothing. So it’s just the over-taxation of poor
Zambians through VAT, through levy on water, electricity which is creating
little resources and that is not sufficient to develop this country,” he
He said the taxes that government was collecting from the mines
were only sufficient to invest in the trips of politicians, their salaries,
gratuities and benefits at their end of office.
“The country is not going
to develop and let’s put it on record, the donor community is upset and they are
very unsympathetic with a corrupt country which cannot raise money from its
country and think that they have to pay for it.
They are not going to
give money to Zambia because we are capable of developing from our own resources
if everybody is taxed fairly, why should the Zambian people sacrifice, pay for
electricity and roads and the people who are using that electricity and road
which are the mining companies because they are the only economy that don’t pay
for that, it is out of this world,” he said.
Dr Mphande dismissed the
minister’s fears that mines would close if government re-introduced windfall
He said the windfall tax is the only tax that the Zambia Revenue
would manage to collect without difficulties.
“The others they won’t
collect, they won’t even know what is happening, cobalt is being exported as
copper concentrates, they are not capable of supervising such a sophisticated
industry but with windfall tax they would know what to do. It is easy to
collect, it’s transparent, it’s efficient and who is the owner of the windfall
profit is the owner of the resource?” he wondered.
Dr Mphande said there
were no meaningful projects that government was undertaking because there was no
He said government was mishandling the country’s mining taxation
and there was nobody else in the world that would let people make money in their
country and go scot-free, saying that was not fair.