Zambia maximizing wealth undoubtedly impact Southern African nation
Steel Guru, June 28, 2011

It is reported that the decision by Tanzania, Zambia's neighbor in maximizing from its mineral wealth has undoubtedly impacted on the Southern African nation. Some key players want the government to instill programs and prevent revenue leakages from the mining sector.

CUTS Zambia a unit of the International anti trust unit, in its reaction to the decision by Tanzanian lawmakers urged Zambia needed to review the whole mining tax system to achieve optimum benefits from the country's mineral wealth.

Recently lawmakers in Tanzania, the leading gold producer in Africa approved USD 27.4 billion 5 year development plans that back the introduction of a super profit tax on mining companies.

Mr Simon Ngona CUTS, Zambia acting Centre Coordinator noted that it was imperative that the country instituted key measures that would ensure revenue leakages were minimized or completely sealed.

Re introducing windfall tax without addressing key challenges of taxation in the extractive industry would not be an ultimate solution to ensuring Zambians benefited from the country's mineral wealth. It is not a single line of tax that ensures a country benefits from its industries but the whol tax system and framework for that particular industry.

Mr Ngona said that the Zambia Revenue Authority is on record admitting that it does not have the capacity to properly tax the mines nor monitor their activities and recent mine audits have reviewed glaring tax evasion and avoidance efforts by the mining companies.

Recently Mr Maxwell Mwale mines minister of Zambia said that the government would audit more mining companies after previous audits turned up as much as US $200 million in unpaid taxes from the key economic sector. The government was still owed by Mopani Copper Mines in unpaid tax while Konkola Copper Mine, was another miner being probed for tax evasion and metal under declaration.

A recent audit on Mopani early this year revealed glaring irregularities and inconsistency in production and revenue figures that the mining company submits to ZRA for tax administration, most of which hinge on its links to Glencore AG.

Revelations of the audit sanctioned by the government with the aid of somecooperating partners also revealed the country's lack of capacity to verify records submitted by mining firms to ZRA for tax administration. It stated that the taxes being paid by mining firms in the country were not consistent with production volumes and the revenues from copper sales.

Mopani has refuted the claims describing the report a flawed. The government has however asked the miner to pay back the money. Meanwhile, reports further indicate that the failure by the government to reintroduce windfall tax in Zambia may replicate badly on the reputation of the President Rupiah Banda administration.The windfall tax if implemented and effected as it was enacted in 2008 would have enabled Zambia generate USD 415 million annually in revenue from mining activities.

Mr Tresford Chisela, a former Zambia Revenue Authority official argued that the President Mr Banda led government had taken people for granted by issuing contradictory explanations and statements justifying their move to abandon windfall tax.

Dr Situmbeko Musokotwane finance minister and Ms Dora Siliya education minister of Zambia were not being sincere with the people on queries that were raised regarding the source of funding for the ongoing road rehabilitations in the country considering that mining companies were reaping super profits, the re introduction of windfall tax was inevitable and the country would not have been struggling with explanations on the source of funding for road rehabilitation programs that were being undertaken. The people of Zambia must know whether windfall tax is there in inverted commas or not.

Mr Chisela said that the mining sector should come out in the open and tell nation what is going on? Why should windfall tax be unpredictable? Dora was on television saying people should not query these projects because the source of funding was the same widely talked about windfall. This does not make sense there is a lot of insincerity on the part of government.

It was apparent that the government had resorted to reckless borrowing and dubious ways of sourcing money for projects such as road rehabilitation because of their failure to ensure that the country benefits from its God-given natural resources.

The country would be plunged into serious debt again if the ruling party was not voted out of government.

He said that for more than two years, President Mr Banda kept on flying but today he is being haunted by trips he made to the extent of resorting to unnecessary borrowing and speedy way of sourcing money to please the electorate. Borrowing can be a good trend if it is done at the right time especially at the beginning of business after it has been planned and not what Rupiah is doing.

He added that the infestations of parastatal companies like Zesco, NAPSA and the violation of tender procedures by the government were the breeding ground for corruption.

(Filed by Mr Kapembwa Sinkamba SteelGuru Correspondent Zambia)

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