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Wednesday, 10 September 2008

A mining windfall tax in tatters...

The Daily Mail reports on the puzzling world of the new fiscal regime. The long running saga between the state and the mining companies continues, with the latest announcement that the government has deferred the collection of the 25% windfall tax from mining companies until the discussions which have commenced between the two parties are completed. A negotiable fiscal regime, now that must be a first! Well may be not a first, after all this is how the MFEZs have been implemented - through negotiations, just like good-old-now-discreted-DAs ( no public inquiry into how those were signed yet). Perhaps now is the time for the government to level with the Zambian people and reveal just how they arrived at the new tax thresholds? When is this government going to release the report from "foreign mining experts" they hired to advise us on the fiscal regime, at great cost to the tax payer ? (its been one u-turn after the next, ever since this regime was implemented - see here & here). Excerpt:

Mr Chibiliti said only two mining companies had so far paid the 25 per cent windfall tax out of the total number of mining companies operating in Zambia. “The mining companies made presentations to the late President Mwanawasa on the windfall tax and he asked Minister of Finance and National Planning Ng’andu Magande to review it so we have deferred the windfall tax until a proper assessment is done by the Zambia Revenue Authority,” he said.

Mr Chibiliti, however, said the deferring of the windfall did not mean that Government had cancelled what the mining companies owed the State. He said ZRA would treat mining companies that have not yet paid the tax as defaulters until a comprehensive report was compiled by ZRA. “The mining companies have cited failure to pay windfall tax to high production costs and as Government we are mindful of the impact the high production costs have had on the growth of the mines. This is the reason we have engaged them into dialogue,” Mr Chibiliti said.

He said the three thresholds at which Government had calculated the collection of windfall tax had increased three times than earlier expected thereby causing difficulties to the growth of the mine sector in the country.


  1. Right now, when Zambia is busy changing guards, that’s when the mining companies are pressurizing to get what they want. I just hope that Magande hasn’t got a finger in this, now that he lost the job at Plot 1. Why give in so easily? The tone (take-it-or leave-it) Levy created recently, is being diluted. Pity! It is amazing how that country is not looked after properly. Because of the intrigues at the world market level, that is why I have always supported to have people like HH at the top. Hichilema & Willa Mung’omba are perhaps among those I think, are qualified to handle possible manipulation by profit grabbers. Forget about those old stone throwers or cheap Marxists.

    The questions being asked on sites like this one are completely being ignored. Where are the young ones to pick up the fight? Are they in bars while their resources are being looted? Side by side we are being told that Namibia’s diamonds are disappearing and yet we can’t draw pararells. We need some tough guys at ZRA, who have no time to fool around with these miners. You pay up or leave. Chinese, South Koreans, Japanese, Indians and not to talk of Murrahs in Middle East, are all tough enough. That is why their economies are improving. We need an ‘Economic dictator’ – someone who will look after those natural resources ruthlessly.

  2. To be effective as nation, you need to get your human capital and institutional reform in order.

    Both are infact related. Better institutional environment encourages better skills retention, which in turn allows better institutional development.

    The diaspora can play a critical role if they got round "incentive issues" and "coordination failures". It can provide both the skills transfer needed, and help in better institutional development.

    Zambia has to figure out how to use people abroad to help it deliver. That will help speed up development. At the moment the very best people are lost to the outside world.


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