13 February 2008
editorial
Ndola — WHEN President Levy Mwanawasa announced Government's decision to introduce a new fiscal and regulatory regime in the mining sector last month, the matter was not expected to raise any dust.
Dr Mwanawasa, who was opening the second session of the 10th National Assembly in Lusaka stated that Zambia's mining fiscal regime was extremely generous to the investors. This is a fact, going by comparative figures with other countries where tax is higher.
We thus expected the mining companies in Zambia to understand Government's position on the revised mineral royalty tax, which has gone up modestly from 0.6 per cent to three per cent.
By international comparison, Zambia earned less from mining activities than any other mining country in the world and our average tax rate of 31.7 per cent is among the lowest in the world.
Besides, Government has explained the reason behind the adjustment, which is largely due to the increase of copper prices on the international market. That is why there is also a windfall tax to be triggered at different price levels.
It is no secret that copper prices have increased steeply and that Zambia and Zambians must in turn benefit from this windfall.
Finance and National Planning minister Ng'andu Magande also underlined the new tax regime when he unveiled the 2008 national budget.
The minister said Government would earn an additional income of over $400 million when the revised tax regime comes into effect.
This is the amount of money that will go a long way in developing Zambia and it would be unwise for Government to ignore this imbalance and bring about equitable distribution of wealth between Zambians and the mining companies.
It is encouraging therefore to see Zambians rally behind Government on this issue of national importance.
While the mining companies and the Chamber of Mines have rejected the new measures, citing lack of consultation and the Development Agreements (DAs) already signed with Government, the Mine Workers Union (MUZ) who are a major stakeholder want Government to go ahead. Academicians also want Government not to relent.
This is encouraging and we can only add to the chorus that Government stands firm in its resolve to ensure that Zambians benefited from the abundant natural resources.
Our appeal would be to the mining companies to see sense. Taking Government to court is not the best solution to the problem. The fact is the situation has changed and the Development Agreements disadvantaged Zambians.
This is the message that the mining companies should take to their shareholders whom we feel will have no objection, but abide by the new Government demand.
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