Government has maintained its stance that it will not re-introduce the windfall taxes on mining companies. Finance and National Planning Minister Situmbeko Musokotwane said the windfall tax was an illusion and a mistake on the part of government.
Dr. Musokotwane said the scrapping off of such taxes on mining companies has been done in the best interest of the mining sector in the country.
The minister said the move will in the next five years trigger about one third of government’s revenue collection from the mining sector.
He has assured Zambians of a fair share of wealth in the mining sector through other taxes that exist adding that it will not be fair to impose exorbitant taxes that no other country in world charges.
Dr. Musokotwane said government will be creating a problem by overcharging mining companies as this will discourage investment in new undertakings.
The minister was speaking last evening when he featured on a QFM’s Monday Nite Live program.
QFM
Day light robbery !
The heading should read: “Govt maintains stance to perpetuate poverty”.
Kuyabebele!!
Mr Minister, every five years Mining Firms are changing names. Mopani may not change names but inflate costs. Are you that stupid?
And this is a legitimate reason to cause outrage and demonstrations on the streets but the common man doesnt care. Thats one of the major differences between the populations of the third world and first world. Oh yeah… and in 15 years therell be a new minister, new govt, new polulace (cause masses there now will have died), and same problem and it goes on and on and on.
MMD decampaining themselves.Musokotwane was advisor to mwanawasa and didnt object the windfull taxes.but today since he finance minister he says it was an ILLUSION and MISTAKE on part of government.People,NGO’s,DONORS,IMF,WORLD BANK,CHURCHES have spoken about the reintroduction of windfull taxes that should benefit zambians,we are being heavly taxed while MINES are tax free ZONES.Shame on you MUSOKOTWANE and MMD.
” Finance and National Planning Minister Situmbeko Musokotwane said the windfall tax was an illusion and a mistake on the part of government. ”
The country is losing at leat 1.2 billion a year in uncollected mining revenues and dividends. Minister Musokotwane has no credibility whatsoever. He also helped the mining companies DEFRAUD their shareholders by not insisting on receiving any dividends for ZCCM-IH when he was a non-executive director there.
He is a crook. That is why his adamant insistence that the mines pay no taxes that the ZRA can collect have no credibility.
” He has assured Zambians of a fair share of wealth in the mining sector through other taxes that exist adding that it will not be fair to impose exorbitant taxes that no other country in world charges. ”
His assurances are like bouncing checks. Chile is getting $40 billion from their mining companies.
” Dr. Musokotwane said government will be creating a problem by overcharging mining companies as this will discourage investment in new undertakings. ”
Overcharging? This guy used to work in a circus, didn’t he? The mines are NOT PAYING ANYTHING. They have an effective tax rate of 0% OR LESS (meaning that the Zambian people subsidize them).
This clown should just keep his corrupt mouth shut, so he doesn’t embarass anyone.
” The minister said the move will in the next five years trigger about one third of government’s revenue collection from the mining sector. ”
What if in the next 5 years, or 4 years, or 3 years, or 2 years, or 1 year, the price of copper is back at breakeven point of $2,000?
Is the Finance Minister going to guarantee that the copper price will remain around $10,000 per tonne?
How can any sane individual suggest the country should follow such a HIGH RISK strategy if he was not corrupt and taking bribes to hold that opinion?
Why did he sit on the Mopani audit, which clearly showed how Mopani and Glencore AG are clearly evading taxes TODAY? And using the same tax evasion methods of ‘transfer pricing’, they are going to pay taxes ‘in 5 years’?
he is a bushit man this ministry the all company change names after five years this country is share waste in living here what a shame!
It is poor leadership in Zambia that has kept zambians poor.. though blessed with aboundant minerals in the soil, as long as our leaders have corrupt characters Zambia will go no where in development; just imagine we are just throwing away our copper without any benefit to our people. surely we need some one brave enough to take us from this pit
i totally agree with the minister. this position maybe unpopular with many but leaders are not there to make popular decisions they are there to make the right decisions.this one is right.
zambia needs a pro business economy where taxes are low and fair on the people creating wealth. not to build another gov centred economy. zambians will be richer not by gov owning more by people owning more. higher taxes on the hard working, on production, on innovation, on business will not translate into more money or a better life for us or our children
Global Citizen
The matter at hand is that while these mines are making a huge killing through abnormal profits, let us as Zambians have a fair share of the proceeds from the high copper prices. Once the prices get lower, these ‘infesters’ will not say let us use the huge profits we made before to ‘reinfest’, they will simply say it is no longer profitable and walk away. The irony of the whole issue is that the common Zambian worker is so heavily taxed than the mines. For how long are we going to give away our precious resources with no gains on our part?
#12 i also think worker are pay lost of tax. you should be advocating for a reduction in paye as the number of workers increase. with that aside, if you have run a business in zambia before you will know that generally we have been paying too much tax to remain competitive, or even to re invest in one’s own business or to employ. this gov is at least trying to enforce policies that favour business survival though it is not enough.
sometimes i tend to think people will still call for w fall tax even if the mines were owned by zambians
#7 MrK, recently a blogger on LT claimed that the lowest paid Chilean miner earned $10,000 a month. During the recent crisis when Chilean miners were trapped underground, international media brought out a lot of statistics. They quoted a very small pay package equivalent of K4,000,000 I think it was, to illustrate how the trapped miners were desperate for employment and risked their lives for such paltry pay. With this information, I challenged the blogger on LT not to mislead other bloggers by twisting information which was in the public domain in this modern day and age of ICT. The blogger never responded to my challenge, and since that blogger also quoted Chile, was that you MrK?
11 Global citizaen,
” i totally agree with the minister. this position maybe unpopular with many but leaders are not there to make popular decisions they are there to make the right decisions. ”
Well this decision is neither popular nor right. The Minister is giving away Zambia’s future, betting that the copper prices will stay high for the next 5 years, and that magically we will be able to collect taxes at that time. The only interests he is looking out for is the foreign mine owners. Or he’s incredibly s****d, which may not be the case.
14 H.H. Sata,
” recently a blogger on LT claimed ”
I’m not a mind reader. If you have a title of the post you are talking about, I’ll look it up.
MrK you are just one of those bitter people who will listen to nothing from the people you oppose. am sure you are planning to vote for sata do you know his views about w fall tax.
this old zambian theory that the gov will get things away from us and redistribute to others viewed as needy is blinding you. you lie that the mines are not being tax. actually what is close to the truth is that gov is inefficient in its tax collection. you are no expert on this matter so i ask you have you seen the various views of experts on this matter.
i have read through many of your posting,s you just sound too bitter to have a reasonable discussion with.
Hello Mr MrK,
I just wish there would be 10 persons as courageous as you…..
To bring a change and to develop AFrica !!!
But in fact , as reading some stupid comments and when we have the proofs of what is happening above us….
We might be discouraging sometime…
Your friend
Hi Anne,
Thank you very much.
14 H.H. Sata,
” you lie that the mines are not being tax. ”
What taxes are they paying again? Not PAYE, that is taken out of workers wages – those are salaries, not mining profits paying for that.
From: ” The Mopani copper mine, Zambia – How European development money has fed a mining scandal }
December 2010
” A World Bank report thus recognizes that tax incentives and low tax rates enable the mining sector to benefit from a marginal effective tax rate of around 0%. ”
Paying 0% in real taxes is not paying taxes.
Only fools or the ignorant dwell on the politicians’ word? our fortune seekers (leaders) don’t care about our welfare? continue voting and dreaming of an utopia that will never come.
#7 MrK, since your blog this afternoon I thought that there was something wrong with your figures so I have done a bit of research. Mining companies in Chile have contributed an average of $4billion in taxes per annum for the past five years AND NOT the $40billion that you have quoted. Also tell the readers that these figures are against the background that Chile, the world’s leading copper producer, produced 5.4million tons of copper in 2010 compared to Zambia’s 700,000 tons (source: International Copper Study Group – World Copper Factbook 2010). MrK, I now challenge you to be a man and retract your figures and not mislead poor readers who may not have time or resources to research as I do. Please tell the truth because I have other facts at hand. #17 Anne, please take note.
1. Fellow bloggers, I want to share with you how civilized the mining tax debate is in Chile, so that we all debate intelligently and not from politic ambitions. Is it any wonder that Chile, world’s largest copper producer at 5.4million tons, has carefully grown its copper industry to current production levels where they are now reaping. By the way, the tax figures that I quoted at #20 includes many other base and precious minerals which Chile boasts of, not just copper. Now read the following article for a start, I will share other articles if necessary as we go on.
Chile Mining Taxes Are Competitive, by Mike Godfrey, Tax-News.com, Washington
Tuesday, June 15, 2010
2. Chile’s Mining Minister Laurence Golborne has claimed that Australia’s proposed Resource Super Profits Tax represents a “tremendous opportunity” to promote Chile’s stable and secure tax regime, at a time when concerns have been raised in the Chilean Senate about the country’s tax competitiveness in the mining sector.
“The situation in Australia is a tremendous opportunity for Chile if we can offer the mining sector stability and tranquillity. Let them know that our tax schemes are stable over time,” Golborne told reporters at the Ministry.
3. Chile, the world’s leading copper producer, is also revising taxes on mining in a new copper royalty bill to help finance post-earthquake reconstruction. The additional Chilean royalties are designed to be temporary and non-mandatory, incentives having been added to encourage voluntary adoption of the tax increase.
For 2010 and 2011, the new proposal has a variable tax rate, between 3.5% and 9%, depending on the copper-mining company’s sales margins and on copper prices. It then reverts to 4% from 2012 to 2017. Chile wishes to raise USD600-700m from the royalty increase, the exact amount depending on which options are exercised under the new tax scheme.
4. I like this one:
“We shouldn’t lose sight of the fact that as a country we compete for investments for our mining sector. Just because you have resources doesn’t guarantee investments. There are plenty of countries with mining potential and investments will go to the countries which offer the best economic conditions,” said Golborne.
5. In the Senate, where the bill is being scrutinized, members of the finance committee are locked in argument as to whether Chile’s taxation rates represent an acceptable tax burden alongside the extra taxes levied for earthquake reconstruction.
Senator Escalona was quoted as saying that “the intervention of the Minister of Mining was well documented but we came to different conclusions. It was difficult to sort the information on the tax burden with the various mining companies in different countries as regards income tax, specific tax and other benefits.”
6. Senator Evelyn Matthei (OPPOSITION) warned that while Minister Laurence Golborne’s comparison of tax rates in Chile with those of other competing countries seemed to indicate that Peru had higher taxation rates, in fact many taxes in Peru were negotiated down, and in practice Peru had lower rates than those of Chile. In the last eight years Peru had doubled its share in world production of copper, and was making a huge and successful effort to attract mining investment. On balance however, Matthei believed that Chile’s tax rates were set at appropriate levels to attract investment, as evidenced by the USD20bn in taxes raised from mining companies in “recent years”.
7. I like this one too:
London-listed Chilean mining company Antofagasta PLC has issued a statement in support of the Chilean tax measures, in which chairman, Jean-Paul Luksic states: “We welcome the fact that the government’s current proposals respect the tax stability agreements previously entered into with the Chilean state, and also reflect temporary changes to the tax system, to address the current exceptional requirements of the country,” he added. “Beyond these exceptional measures, we expect Chile to continue to provide a stable and supportive environment for long-term mining investment.”
Finally, MrK, I am waiting for your response to my challenge to you at #20 before I go to bed.
28 H.H Sata,
” Finally, MrK, I am waiting for your response to my challenge to you at #20 before I go to bed. ”
You wrote: ” the world’s leading copper producer, produced 5.4million tons of copper in 2010 ”
Well that should be about right. Obviously, it was turnover that would be in that ($40 billion) range, not taxes.
However, what is more intriguing, is that *CHILEAN COPPER MINES ARE STATE OWNED*. :)
In other words, there is no need to tax them. All the profits go to the Chilean government. I’m sure a lot of the costs are also spent on Chilean suppliers and local companies.
situmbeko you are speaking nonsense and you should be very ashamed of yourself!!
#29 MrK youare just a bitter guy who can face realities
#29 MrK you are just a bitter guy who can’t face reality
31 Global citizaen,
You resort to name calling only, I win. :)
If the Chilean state owned mines have a turnover of $40 billion, they do keep it all. And if their expenses go mainly to local companies, the money stays in the Chilean economy.
That is how development works. You don’t give money or resources away when you don’t have to – in fact you jealously guard them and count every penny.
That’s how countries get rich.
you chile is not a good exapmle for zambia.chile as a nation are a failure. their worker in general as paid as little as zambians in fact in many cases an equivalent zambian ends more. SA is a much better nation than chile and if we want to learn some thing lets learn from SA. you want us to go back to the zccm era. what long term benefits did we get. it does not mean that if gov does not own a company they are loosing. i have given you SA which mining companies does the SA gov own
it is such policies that will keep south america under developed and SA, bostwana, Namibia egypt will surpass them. Russia has become economic power in europe because it is changing policie from the one MrK is propagating to the ones MMD is perusing