Miners in Zambia seek government’s consideration to reinstate the windfall tax and raise enough revenue from the mining sector while relieving the employers in the sector from excess taxation to improve their living standards.
Mr Oswell Munyenyembe general secretary Mine workers union of Zambia said that it was imperative for the government to reduce the pay as you earn taxations slapped on the miners in the industry and cushion the taxation on workers in the sector by reintroducing the wind fall taxation regime that could maximize their earnings from the sector.
Mr Munyenyembe said that the miners contend that while most miners were striving to survive through their meager earnings, the taxations that include Pay As You Earn should be reduced drastically to improve their welfare. The best option for the government to generate enough revenue and grow the economy would be among other measures that include windfall tax. “It is our hope that the government will review the high taxations on the miners like PAYE to improve their lives. The best option would be to reintroduce the windfall tax.
He argued that fears that the foreign mining companies would desert the country with the imposition of such taxations like windfall tax were not true arguing that most of the mining companies were making profits in Zambia while retaining little or nothing of their revenue from copper and other metal related sales for the country to benefit from the mineral wealth.
He said that however the government said it is studying the matter as to whether the windfall be re introduced or not. Government will look into the whole process and should it be necessary to bring windfall tax back, we will re-introduce it though it may take a different form.
It is government’s desire to engage the mining sector in the whole process. In recent months there has been increased debate over the reintroduction of the windfall tax in the industry which was introduced in 2008 under the Levy Mwanawasa government, ostensibly to realize USD 415 million from taxation per annum.
It was however waived a year later under the Rupiah Banda on fears that it would cause the mining industry to collapse. The Zambian mining industry contributes a paltry 2% of the country’s Gross Domestic Product despite employing more than 30,000 people.
Some analysts argued that reintroducing the windfall taxation would increase the capital expenditure and force government to spend more to sustain the economy.
The players further argued that plans by the government to revisit plans to secure the USD 500 million Euro Bond would contribute the local currency failing to sustain itself against other convertible currencies. The experts suggested that government should instead encourage mining companies to sell their copper products in the local currency to help sustain the value of the money.
Recently Mr Wilbur Simuusa mines minister of Zambia contended that the mining sector needs to be fully reviewed if it is to contribute to economic development citing the current tax regime as one of the areas that need to be revisited. The tax system is complicated and is not fully understood by stakeholders such as the Zambia Revenue Authority which has resulted in failure to collect adequate taxes from the sector.
He said that we have not collected adequate taxes in the past because ZRA has no capacity to collect the taxes due to the complicated tax regime. There is need for a simplified tax regime which will benefit both the country and the mining firms. Government seeks to look into the whole tax regime and come up with a system which will be a win win for all stakeholders.
(Filed by Mr Kapembwa Sinkamba SteelGuru Correspondent Zambia)
