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Wednesday, 26 August 2009

Blindspots (Maxwell Mwale)

"We believe that the government policies should not be determined by short term conditions such as the price of copper..We realised that windfall tax was an addition to the cost of production and that it was discouraging investment.."
Mines Maxwell Mwale managing to entangle himself again. First, the price of copper can be both short term and long term. If Mr Mwale believes that "short term" factors are not critical thats understandable. But he should not try and fool people by asserting that the long term price of copper is also irrelevant. Secondly, the windfall tax is defined precisely to reflect "long term trends", not the short term because it is designed to captures windfalls in some undefined, and often distant future. Having a windfall tax is consist with long term vision of how markets operate - they go up and down! The windfall tries to smooth out revenue to government over time!

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