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Saturday, 1 December 2007

Quote of the week (Dr Kalombo Mwansa)

“We are already proposing in the revised Mines and Minerals Act that government should not enter into a development agreement with new mining investments because all they need to do now is transact like any other investor and pay taxes the way others are doing since the economy is doing fine and the price of copper is high…..Government is studying this matter and consulting widely to ensure that we find a lasting solution to the tax structures for the mining companies so that the country can also benefit from mineral resources…..We realise the importance of bringing the royalty taxes paid by mining companies to a world average.”

Dr Kalombo Mwansa (Mines Minister) - Post 30/11/2007

The move towards a clear framework is certainly welcome, but I remain unconvinced by Dr Kalombo's utterances, for three reasons. First, the policy is focused on "new investments". What about existing investments? Have we given up? Secondly, government may be studying the matter, but it is certainly not "consulting widely". The Mines Ministry website has yet to take shape, so just where is he consulting widely? No one has seen the Draft Mining Policy, let alone the proposed "revised Mines and Minerals Act". All we have heard is that it will become law in December 2007, along with it, provisions on uranium and oil exploration. As usual, policy will become law quietly without full discussion among all Zambians. Finally, I hope Dr Kalombo realises that the "world average" is certainly not the 3% that was proposed in the 2007 Budget, and subsquently enacted in Parliament, earlier this year.

4 comments:

  1. We realise the importance of bringing the royalty taxes paid by mining companies to a world average.”

    And why are they always aiming for mediocrity?

    Why not make royalty taxes in Zambia the highest in the world?

    How much profits do they want to sacrifice on the altar of being thought of as 'competitive'?

    Finally, I hope Dr Kalombo realises that the "world average" is certainly not the 3% that was proposed in the 2007 Budget, and subsquently enacted in Parliament, earlier this year.

    Even in Africa, the SCIAF report mentioned 10% as the higher end.

    Maybe they should do away with all other taxation, and just charge 30% of turnover (with a profit margin of 60% as Equinox stated it had, that is still only about about 50% of profits).

    I mean, how much money do they want to lose out on?

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  2. Has anyone read Murray Sanderson's defense of the current mining contracts in The Post?

    I would say some explaining is in order.

    ReplyDelete
  3. somehow it feels like i apply for a job when in desperation i accept anything and when am no longer desperate i think of changing my terms because i have a job.

    i know that the company is making more money but there is a contract to be adhered to.

    it's either my bosses are selfish which is normal or i take drastic measures.

    this mess calls for powerfull BRAINS of zambians that are dealing with these hedge fund administrators that have locked their profits depending on the negotiations.

    the gov. needs many zambians that truly understand what is happening on the global market and the impact of our renegotiation of profits.

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  4. Arthur,

    the gov. needs many zambians that truly understand what is happening on the global market and the impact of our renegotiation of profits.

    What you are saying is that there should be a society wide debate on what the mining agreements or parliamentary legislation should be, and how they relate to the financing of development and economic growth.

    There should be input from

    - parliament
    - the press
    - civil society organisations
    - the general public

    There are always these workshops being organized, so why not have a series of workshops on the purpose and impact of mining legislation?

    It seems like the country's number one issue. This is going to determine whether and how much money will be available for the development of the economy.

    And another thing, a general comment. I am sick and tired of these free market theories about how business is so much better than government. It wasn't business that built Indeni. And business has not built one other Indeni in 16 years of free market theories. It was the socialist state that built the infrastructure that business is still using, even while they are decrying socialism and government inefficiency.

    The state must have money to build infrastructure, because no one else will.

    I am not saying there should be a return to socialism, but there is no denying the central role the state must play in building those things business has not found a way to make a profit from - like long term, big overhead investments like roads, railways, regulatory agencies, etc.

    ReplyDelete

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