This exchange in Parliament between two former occupants of the Finance Ministry and the Vice President on the windfall tax is quite revealing. I am particularly worried that rather than putting forward a reasonable defence for removing the windfall tax (if one exists), the Vice President appears to suggest that the dispute with the mining companies is at the heart of the decision, making the Executive Branch appear to be a puppet of foreign companies.
MPs engage in heated debate over windfall tax, The Post, News Report :
Member of parliament last Friday engaged in a heated debate as they considered the Income Tax (Ammendment) Bill which seeks to suspend the windfall tax on the mines among other things. Several parliamentarians from the opposition and a few from the government argued that the tax should be maintained.
Chilanga MMD member of parliament Ng'andu Magande advised the government not to abandon the windfall tax that was introduced last year on the mining sector. Magande, who is also immediate former finance minister, said removing the windfall tax would put the government at a loss in the event that the price of copper went up on the international market.
"I remember that some time last week, His Honour the Vice-President advised former and serving government officials to maintain their oath of secrecy which they swore when they assumed office. Indeed I do agree with the learned Vice-President who is also the Minister of Justice that there are critical issues which should be granted such secrecy," Magande said.
"Right now I am in a difficult situation wondering that with all the knowledge I have acquired in my service for the Zambian public can I keep quiet because of the oath of secrecy as emphasised by the Vice-President? I want to assure the learned counsel and Minister of Justice that we will keep secrets valuable, but let us also remember that we have to give value to our people.
"On windfall tax I will keep no secrets. May I urge my colleagues in government to consult the team of experts we had assembled to look into the affairs of the mines. We constituted a team of 15 experts including Mr [Evans] Chibiliti, and they are all still in government. You can consult them, they will show you how we came up with the windfall tax."
Magande advised the government to maintain the windfall tax in the law, saying it could easily be adjusted. "We don't need to remove this windfall tax from our statute books, it's self adjusting. We have a law in our statute books, which says that anyone who commits suicide commits a crime. But my question has always been that if I commit suicide that means I am already dead, so how does a dead person commit a crime? You see, this is the law we have maintained. So what nuisance is there in us keeping the windfall tax in our statute books?" Magande asked.
"Yes, I'm aware that sometimes we ignore advice even when it's good. And sometimes those of us who advise are being told that we are wrong by those we advise. This makes one wonder who is really wrong. But since the Vice-President has promised this House that they will consult, I urge them to seriously consider keeping the windfall tax."
And Katuba MMD member of parliament Jonas Shakafuswa accused the current administration of abandoning the Levy Mwanawasa legacy. "This government is discontinuing with the legacy of Mwanawasa. When we campaigned we campaigned on the basis of continuity. But what we are seeing now is a shift from what our late president had believed in. I know that [the] Vice-President is nodding his head. Yes, winning you might win, but it doesn't mean that you have it all," Shakafuswa said.
"Even if we are coerced into voting I don't want to go against my conscience, I would rather side with the people on this issue. We should remember that the windfall tax was meant to give relief to people who service government through Pay As You Earn. Maybe people who were new didn't understand it.
"We have to be careful with our kindness to these foreign investors. Let's remember that we sold the mines for almost nothing and within a year the people who bought the mines got back their money and made huge profits. Those investors should not take government for granted.
They should know that in business there are ups and downs. When the price of copper was good, they made a lot of profits and they stashed this money in their banks outside the country. These people can go ahead and develop India, China, UK and we remain begging. Our children won't see the benefits of these minerals, they will only see holes from where the minerals were dug. Maybe somebody was bought, maybe somebody was given something."
But Vice-President George Kunda vowed that the Bill would not be withdrawn from Parliament.
"We are not saying that mining companies will not pay tax. But we have considered certain circumstances. Mining companies declared a dispute with us over the windfall tax. Some of them have paid this tax, others have not. So we have decided to go for arbitration with regard to tax. We must make investment attractive to investors, especially those who are keeping jobs," Vice-President Kunda said.
"This Bill if withdrawn will throw the budget off balance. If the issue of windfall tax is something, which is of concern it would require ourselves to go back and consult. We are determined at this stage to proceed with this Bill. It has several meaningful provisions. For example, the CDF [Constituency Development Fund] is coming from the tax measures instituted. I know you are determined to fight but there is a lot we can benefit from this Bill. There is CDF where a lot of us MPs can benefit by building clinics, hospitals and schools."
The debate later led into a division where members of parliament voted on whether to pass the Bill to committee stage or not. The Executive won by 63 votes to 54, and the Bill was passed into committee stage where it would be considered on Wednesday next week.