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Sunday, 29 March 2009

To whom will the windfall now?

"Basically what it means is that one tax regime they [Mining Companies] did not like because it was eating into their profitability is scrapped and they should have no complaints....We were aware as the government of (constraints) created by higher taxes at the mines. Zambia will now be perceived as a friendly country in terms of tax regime and it will attract more investments."

Mines Minister Maxwell Mwale explaining why the Government forced through the abolition of the windfall tax despite opposition from many corners, including former Finance Minister Minister.

The Opposition were particularly angry last week on this government initiative, culminating in a walk out from Parliament. The Patriotic Front Chief Whip Hon Yamfwa Mukanga described the Government action as an "act of betrayal":

"The situation is that we don't want to be a part of the removal of the windfall tax. Windfall tax is very important. In order for this country to survive we need income. And we have been fighting in this House that we may have a lot of money donated by a few countries. Through windfall tax we can make that money because God has given us copper. We want to use our copper, we do not want to have a donor dependence syndrome to continue.....So what we thought was if the windfall tax was there we would be able to raise a lot of money. But this government seems to continue to be depending on donor funds, the goodwill of donors. It won't work, one day the donors will pull out. So today we decided not to be a part of these [windfall tax] issues. If they want to ensure that they remove that clause which allows them to collect windfall tax let them do it alone. In fact the windfall tax as it is in the law it is supposed to be triggered when copper prices reach $5, 112 per tonne. The second trigger point is in the range of $6, 600, the third trigger point is in the range of $6,700. So this is still way up the current copper price. That's why we are not happy that the windfall tax can just be abolished like that, NO. We are losing out, we are not helping the Zambians. Zambians will continue to suffer with a government like this. That's why the people out there should be able to see who is with them and who is against them. With this type of understanding we will always have problems, that's why we decided, no let's walk out, we don't want to be part of it."

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