UK Zambians cited Mr Miles Sampa finance deputy minister of Zambia as saying that Zambia’s tax revenues from copper mining have jumped by 46% to ZMK 35 billion per month after the doubled mineral royalties came into effect last April.
The government has this year doubled royalties on copper mines to 6% in order to bring in badly needed revenue increase social spending and hope the move would stem off criticism from key stakeholders for the State to introduce the windfall tax.
The government introduced the windfall tax in 2008 but aborted the contentious tax a year later after copper prices plummeted to about USD 2,900 per tonne.
Mr Sampa who is also Matero PF Member of Parliament said that the government’s move to resist calls for 25% windfall tax and embrace the mineral royalties had started paying dividends. I can confirm that the PF government has managed to get 46 per cent more from the mines than the MMD government through the increase of mineral royalty tax from three to six per cent as at end of April when the mineral royalty came into effect.
He said that the government has managed to obtain ZMK 35 billion more from the mines due to increase in mineral royalty tax and that represents an increase of 46% per month. The mineral royalty was definitely the better way to go because as soon as the copper is exported, the mines are taxed before any miner can even remove their costs unlike the windfall which depends on profit. In terms of targeted revenues from the mines this year, we are within the budget and slightly exceeding.
Mr Sampa said that the windfall tax would not have achieved the increment coming from mineral royalties as most mines were currently recording losses. Because the rest of the mines are still making losses and the contracts that we found under the MMD, some of them foreign mining firms, even if they make profits for 5 years, they will still won’t pay tax because some of these contracts we inherited from the MMD are bad from the point of view of Zambians.”
He said that but we can’t change them contracts; we have to honor them because we are a government that needs to respect contracts entered into by the previous government. All mining companies in the country save for First Quantum’s Kansanshi Mines are still recording losses.
Mr Sampa said that the increased tax revenues from the mining sector would help the government offset revenue deficiencies from reduced Pay As You Earn and also allow the government augment expenditure on infrastructure projects to spur employment creation.
He said in the government’s quest to stabilize and reform the mining fiscal regime, there will be no drastic measure that might result in the country killing the goose that lays golden eggs. What we have done already the mines are complaining, so, everything has to be gradual don’t anticipate huge surprises. So the cry from Zambians that we should get more out of our copper was answered in April where we have obtained K35 billion more.
Source - UK Zambians.co.uk
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