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Thursday, 3 December 2009

The Great Swindle

An update to Mining Reflections : Proposition One, with new tax data as provided in a recent EAZ public debate presentation by Dr Mpande (UNZA, School of Mines). This shows conclusively that the mining revenue is in effect negative given the vast domestic VAT rebate (or the friendly term "exemption"). Excel form here.

Update :

Trade Minister Felix Mutati has weighed in, making it clear that there would no tax rises for mining companies next year, despite IMF / World Bank calls to the contrary. In his words "You cannot just be playing around with taxation -- one year you do this, another year you do that". This is a poor argument and one Mr Mutati clearly did not accept earlier this year when his government abolished the windfall tax. The simple truth is that the current mining arrangement is not acceptable to ordinary Zambians. It therefore remains the case that unless we have a mining policy acceptable to ALL it will not stand the test of time. The mining companies should not delude themselves, the current fiscal arrangement is not sustainable.

Update :

Caleb Fundanga appears to have caught the contagion, bizarrely sounding off that copper prices at $7,000 a tonne may not be good and he would rather see the prices stabilise around $5,000.

1 comment:

  1. The data does not show 'conclusively that the mining revenue is in effect negative given the vast domestic VAT rebate'. There is vast domestic VAT payment made by the suppliers of the mines that should equal the rebate. This VAT payment would not exist if it were not for the demand of the mining firms for the suppliers' goods.

    Hence the mining sector actually does make a significant positive contribution to tax revenues.


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