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Wednesday, 14 October 2009

Diversifying through higher taxes..

The IMF makes its position known :

"Continued growth and diversification of the Zambian economy requires an increase in Government resources for high-priority spending on investment and social sectors. In view of fiscal trends, this represents a major challenge. Government must increase its take [of mining taxes] and contain pressure for increases in current spending particularly salaries and benefits".
You can't diversify without money. I have repeatedly made this point - see A mid-week rant.....on the state we are in.. and five questions on diversification. Anyone who tells you that they are serious about diversification, but insist on collecting as little mining tax as possible are lying to you. At the current pace and without changing the fiscal regime Zambia will remain undeveloped well into 2100. After all according to Gregory Clark's A Farewell to Alms, Europe was like Zambia today in 1850.


  1. Yes, but I think the main point of Birgir Arnason's comment in the Times was to collect more-- it's not an issue of the regime itself.

    Mining companies need to lie less and pay more! They commit transfer pricing atrocities, lie about their costs, and often just don't pay!


  2. YM (LSK)

    See my interview in the Post :

    The collection problems cannot be divorce from the tax structure.

    Its not sound to rely on “honest behaviour” . We must design tax systems that already accounts for the incentive to cheat.


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