Saturday, 1 October 2011

List of Prominent Zambians For A "Windfall Tax" On Mining

This post is regularly updated with quotes from leading analysts and public figures urging the government to reintroduce the windfall tax. Please scroll to the bottom to see the latest contributor  :
"It is an injustice for the government to only collect US$ 77.6 million from copper exports valued at US$2.9 billion. And I do not see that the mines themselves in their heart of hearts would consider it an injustice to pay extra more" 

“Why would any patriotic citizen or leader stop that windfall tax? That issue is so crucial such that the civil society and ordinary citizens will continue to argue they must impose that tax...I am also urging Parliament to reintroduce this topic and even if they get defeated, they must ask for a division and we must know which people are supporting the government over this failed and imprudent manner of taxing the mines. They should be named during the campaigns that these are the people who refused to have taxes imposed on the mines and let them go to the Copperbelt and campaign on that basis.” 
- Bob Sichinga (Economic Consultant)
“The government seems to have deliberately chosen to allow Zambians to continue wallowing in poverty. They are not showing that they are listening to the people. The copper that is being mined will run out one day. Even the investors whom they are being protective about, look at the poor types of jobs and wages that they are giving our people. If they say they won't re-introduce windfall taxes because this would scare away investors, in whose interest are these investors existing if Zambians cannot get any meaningful benefits from their investments?"
Patrick Mucheleka (Executive Director, CSPR)
"His attitude that he doesn’t care and no more questioning of removal of windfall tax, is retrogressive. He is a President who does not care about the welfare of his people. The wealth of his country is taken away by other people"

- Fr Patrick Chibuye (Mpika Catholic Diocese)

Update (19 November) :
"It has become a joke in the West that foolish Zambians will give you everything you ask for while they humiliate themselves by walking naked. This quote is from a so-called good investor in Zambia....I have heard numerous rubbish from the government that if they increase the taxes, they will deter investors coming to Zambia. This is nonsense and a sign of lack of ability as they do not grasp the world climate on the economy...."

"So the prices will keep high and going up. The newcomers will be many, perhaps we, ourselves under ZCCM-IH can join or takeover and approach the mining sector as a business this time. If somebody tells you the investors will pack up and go from Zambia, they are either making false statements or they simply do not understand the word economics especially as it relates to supply and demand of copper in the open-market.."

"Nobody will do it for us. Before, we gave everything to the British and now it is the so called "new investors". Good investors with a heart will accept tax of eight per cent on royalty and 25 per cent on windfall. I will bring in another local tax for local communities of two per cent on mineral rights that goes directly to the development of the Copperbelt and other areas. For investors, these are peanuts, but mean a lot to us Zambians. We are rich on paper but still run a kitchen economy. Why?"

- Prof Clive Chirwa (Bolton University)

Update (26 November) :
"This is scandalous, to say the least, to get less than ten per cent of the total revenue from a commodity which is not replaceable. What these people who are calling for windfall tax are saying is very important. Let Honourable Musokotwane forget the name ‘windfall tax’. If they are so scared and are afraid of windfall tax because it came in Mwanawasa’s speech, because it came in Magande’s budget, let them find other names that are suitable to their ears and their tongues, as long as it earns more money out of what is being extracted and leaving holes for us.."

- Ng'andu Magande (Former Finance Minister)

Update (26 November) :
"It is hard to understand why Dr Musokotwane is coming out so strongly against the re-introduction of windfall tax when that is what Zambians want. In fact, I have not heard any mining company oppose windfall tax as strongly as Musokotwane and President Rupiah Banda"
- Sibanze Simuchoba (Lawyer)

Update (26 December) :
"The windfall tax should be reinstated with some modifications to accommodate the concerns expressed by mining companies but not to the detriment of Zambians...Zambia should get a fair share, 50/50 share because we are partners with these investors. Zambia’s contribution is the resources, and the investor’s contribution is the investment....f this is what he said, I am sorry to say that it was a misrepresentation of facts. To the best of my knowledge, at no time did president Mwanawasa make a decision to scrap the windfall tax. What had happened was that the mining companies did not object to the windfall tax. They had concern with the method of calculating that tax"
- Jack Kalala (Former State House Special Assistant)
Update (2 January 2011) :
“The MMD under president Mwanawasa made some reforms with the introduction of the minerals taxation Act which introduced the windfall tax, but with Rupiah’s arrogance, calls for the re-introduction of the windfall tax are falling on deaf ears...”
- Hon Charles Milupi (ADD President)

Update (4 January 2011):
“Granted they are in power today, they should make sure they do according to the will of the Zambian people who put them there... In fact, the Zambian people are the owners of the land and the copper. If they make a decision which is not in favour of Zambians, then this should be justification to kick them out this year when the election comes because they have failed to do the will of the electorate....It is sad that this irresponsible government of the MMD must continue to argue that we will benefit through the corporate tax and not the windfall tax....We in the PF are saying posterity will judge these people harshly and those who will not survive will be hiding in shame.”
Emmanuel Chenda (PF National Treasurer)
Updated (8 January 2011):
"Can you imagine Nigeria is a far much greater economy than Zambia but they have introduced windfall tax on their oil, but here we don’t have? The people in front of us (leaders), they have eyes but they can’t see, or they can see but are not just interested...They are indifferent, because if we have more money we will put up another university in Namushakende. We will build bridges. People are living in squalor in Misisi; we will build new houses as our friends are doing in other countries. But somebody is sitting in an air conditioned office at the Ministry of Finance and says ‘we can’t collect windfall tax’, and the President is watching."
Edith Nawakwi (Former Finance Minister)
Updated (13 January 2011) :
“I know it is important to safeguard investments but the large corporations should also not be allowed to milk the country instead of helping it to grow....If they the government don’t like the word windfall tax, let them replace it. It doesn’t matter if they change the name, but whatever they will come up with should translate in increasing revenue collections to improve the lives and welfare of the people.”
Love Mutesa (Ambassador, Chairman CUTS International - Zambia)

Updated (19 January 2011) :
“We pushed for the introduction of windfall tax in 2008 because we realized that it was time for Zambia to benefit from its on mineral wealth but the government thinks otherwise and believes that we can still make enough money from variable taxes, which are not enough because miners pay a fraction.”
Dr Saviour Chishimba (President, UPP)

Updated (11 February 2011) :
"This report is very damning on the part of the mines and should be seen as a wake-up call to government....And this should not be politicized. This report means the problem may not only be confined to Mopani, but it maybe symptomatic of more complex, much longer and wider problems in the mining sector. Although this report maybe preliminary, it shows the inadequacies of our tax system.

The government has not really, maybe them mines, realise that compliance to the country’s tax policy is important....When you had the former president late Mwanawasa announce the windfall tax, a number of them foreign mining firms refused to pay. Now, you are talking about the government negotiating with the mines to pay that tax obligations. Where do you hear negotiations on that policy? Now, they are even refusing to have them auditors access to valuable information.

In light of the revelations of the audit, the windfall tax is the only tax that can secure what the government can get"

Update (13 February 2011):
"If not properly checked, multinational companies such as Mopani and many other mines will continue to under invoice and under price for purpose of tax avoidance and evasion. So it is time to come up with a tax regime that is easier to enforce and collect revenue and also to compel the mines to do more on corporate social responsibility since copper is a waste asset and soon we shall very negative environmental liabilities"
- Dr Fred Mutesa (ZED President)
"The unpleasant thing is that we have lost money because of the adamancy by Situmbeko and Mwale who insist that the mines are not making profit. In 2008 during debates to amend the mines and minerals Bill, I proposed the establishment of a Minerals Accountability Directorate which should monitor from extraction to finished products and come up with independent figures and then advise ZRA on how much to collect as revenue since ZRA lacks capacity to genuinely tax the mines."
- Hon Mwenya Musenge (Nkana Constituency)

Update (16 February 2011):
"This government's tax regime is not providing enough [revenue]. I am condemning the investors for failing to even pay what is due to Zambians...This high price of copper at US$10, 000 per tonne will only be there for a short time and after that the Zambians will have nothing to show what they benefited from it. We need to have something to show to our children when copper is gone that this is what we built from the copper taxes."
- Hon Yamfwa Mukanga (Kantanshi Constituency)

Update (3 March 2011) :
“People are not benefiting enough from the mining sector compared to the people who run these mines. The resources that are obtained from the mining sector are not trickling down to the poor people of Zambia. Out of the whole mining revenue we are only getting about three per cent which is totally unacceptable…Other countries like Chile are getting more than US$40 billion from the mines. That is why we are calling for the windfall tax in order to bring the benefits closer to the people. But what we are dealing with is a government that is siding with the mining companies; a stubborn government that does not want to listen to its people. It is clear that they are not on the side of the Zambian people”
- Hon Wylbur Simuusa (Nchanga Constituency)

Updated (1 October 2011) :
"Allow me to thank God, the genuine church leaders, The Post and the people of Zambia for the success of the just-ended elections. However, there are many things in government that need overhauling promptly. The new government should as soon as possible tackle windfall tax, labour issues, investment policies and decentralisation."
- Father Mwewa (Catholic Church)

21 Comments:

  1. I agree that we really need to turn this Windfall Tax into a campaign issue. It baffles me that the government can afford to tell donors "to Pack and Go" and yet they are worried about the investors leaving who are here to make profits for their families and shareholders. What is the point of Foreign Direct Investment if it is not about developing Zambia? How can innovation of collecting more tax from Rich Foreign Companies be bad? Denying the re-introduction of windfall tax is the same as saying that 'it is ok for foreign companies to make excessive profits out of our copper - let them go with that money and develop their cities and towns - it is ok for our people to remain in poverty and work hard to make foreign companies rich while our people remain in poverty' - no wonder workers of this foreign campanies have started shooting and peeing on our people. How can a LEADER purpoting to LEAD their people from poverty to development think that it is ok to let excessive profits pass under our noses into foreign bank accounts? The MMD government should just be bold and remove fear from policy making. Their interest should be for the Zambian people not for foreign investors. Investors have their own systems that look after them very well - that is why they have money to invest in our country in the first place. Our people depend on govt for good roads and other infrastructure if they deliberately refuse to collect more money to help us develop, why should we vote them back into power?

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  2. It has been argued that the Windfall Tax would be a 'disincentive for the main drivers of the economy.' My problem with this is that it does not see business as a means to an end (wider economic development and poverty reduction), but as an end in itself; business must be protected even if there is no imminent danger and regardless of the gaps it fails to address on the socio-economic landscape of the country. When such a view is expressed by any academician, there is nothing to worry about. But when the LEADERSHIP of a developing country vehemently agues against the Windfall Tax in the manner that we have seen, only God knows when we will ever have enough income to develop.

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  3. As much as I applaud the fact that more people are talking about this issue, is the message getting to voters? As long as RB and his cadres show up when 5 km of tar road are unveiled or when a borehole is sunk this issue is a non-starter for most people because they are in the dark, in my opinion. This is where I think our politicians (from all parties) and other informed parties (like the ones above) fail the Zambian people. It’s almost as though they think the average Zambian is not intelligent enough to understand the benefits or pitfalls of a windfall tax, and so it’s not brought up except in small circles. We’ve bought into the mentality that Zambians are only concerned with so-called bread and butter issues like the availability of utujilijili in Comesa market.

    Those parliamentarians who are in favour of the tax should take the message to their constituents and make it a priority among other things. Give the people information, and if they feel strongly about it they’ll start asking questions and demanding action. It reminds me of when the people in the Lumwana area were decrying the dilapidated roads and other infrastructure and some cheeky person said it wasn’t the responsibility of the mining companies to do such work but that of the government. Now how is the govt going to do such work when they’re not allocating the right amount of resources to the area? And where are the people's representatives to apply pressure?

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  4. Miss Bwalya,

    I think the problem is that the OPPOSITION are against higher mining taxes.

    That is the reason. All political parties in Zambia are against the windfall tax. They have said so in the past.

    This is quite sad because it means MPs who speak out risk deselection for 2011.

    I fear mining companies run our country now.

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  5. And yet, if there is enough public awareness and pressure, the political parties can change their minds.

    I think there should even be demonstrations at the mines, even sabotage. There is no excuse for the mines to be allowed to evade the taxes to the government or cheat on paying dividends to their shareholders.

    Even with today's tax regime, a tough government can collect at least $1 billion a year from the mines. The government elects not to do that, and I think it is because of bribes.

    But bribery is illegal, and undermines the legitimacy of the Development Agreements. It is also illegal for US citizens to bribe a foreign office holder. Anyone who does so can go to jail for it.

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  6. Bingo a Zambian angryJan 3, 2011 10:59 AM

    Each day zccm-ih earn 1.5 M US$ from KANSANSHI Mining but FQM refuses to give correct dividends to ZCCM-IH, FQM kept this money !!

    in the last 5 years, zccm-ih received only 25 M$ from KAnsanshi mining whereas it would have to receive between 300 and 400 M US$ !!


    BUT FQM REFUSES !

    FQM prefer use the zambian's money for developping its business all around the world, without the zambian holding


    GRZ must expel FQM from zambia and prefer other company a real partner


    Changing partner is a solution

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  7. It's ironic that Sardanis talks about reinstating the mining taxes.

    He was one of the principal architects in the total obliteration of the mining industry in the 1970s! Just read his first book to understand how and why. I would dismiss his plea without even giving it a thought.

    It's a pity that Musokotwane gets blamed with the removal of the windfall tax. The principal decisions had already been taken when Magande was still in power. So he can hardly make a claim to restore the windfall tax. First, he should start by saying "Sorry, it was my mistake, and a mistake it was... please restore the tax."

    As a foreigner in Zambia, I find it very difficult to read these recommendations by people who claim one side or the other. Just like this blog (and Chola I have mentioned this to you on a number of earlier occasions and I mean no personal injury), passions and opinions run very strong in Zambia. It is Zambian culture to (and I love them with every cell in my body) somehow un-objectively rush to one extreme argument, and defend it with passion and zeal. Just listen to radio shows in Zambia (the UNZA morning talk time show is an example).

    Credibility is difficult in a partisan environment. I blame both sides for this, but everyone, and this blog included (and Chola you yourself have admitted to me in the past as being partisan to some extent and that you cannot differentiate those personal views from your articles), just makes the problem worse.

    What would be good Chola, is for you to write (even if you dont publish), a list of 5 merits and demerits about the windfall tax. Make it 10. Think carefully about each merit and demerit.

    My own personal opinion, and I have expressed it in the past: the windfall tax is a lazy excuse to avoid what the big problem really is: Mining companies are getting away with very unfair advantages in the political economy. They enjoy unrivaled access to the top political leaders on both sides of the floor. But an imposition of a windfall tax is equivalent to an own goal. It is an open declaration of this problem, and a declaration that Zambians do not have the capacity to solve an inherent issue: the strength and will as a nation to stand up to mining companies and audit them to ensure that they are not cheating. If they can be fully audited, then the existing tax structure should be EQUAL to the receipts of the windfall tax.

    But that is my personal opinion, which of course is always prone to the influence of my own private beliefs.




    YM
    LSK

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  8. YM (LSK),

    I appreciate your thoughts.

    I am not here to convince you of my impartiality because neutrality is an illusion philosophically. As it turns I am very partial to the poorest people in our society as a matter of fact and I make that clear always.

    You suggest that I write a post on the pros and cons of the windfall tax. I have written on this before and explained why economic theory supports a revenue based measure where incomplete information is perverse. We all prefer profit based taxes as a first text book answer for well known reasons - but that is under very strict economic assumptions. I have given interviews to the press making this clear.

    Now let me say to you: this website is very open to you
    writing a piece on the same. I WILL PUBLISH IT. SEND YOUR PIECE ARGUING FOR THE STATUS QUO. I WILL PUBLISH IT ANONYMOUSLY IF YOU PREFER.

    We are not like the Daily Mail. We don't practice intellectual censorship.

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  9. YM,

    and a declaration that Zambians do not have the capacity to solve an inherent issue: the strength and will as a nation to stand up to mining companies and audit them to ensure that they are not cheating.

    I don't like the capacity argument, and I would say it has nothing to do with Zambians.

    This is a global problem, and it is inherent to the Corporate Globalisation of the world economy. If you look at the United States, corporations have so much power that they are electing lobbyists as representatives. They are also paying a true tax rate of 0% to 5% - because of all the tax loopholes they use, offshoring their headquarters to tax shelters, etc.

    This problem is inherent to the foreign or transnational ownership of the mines in Zambia. If it was owned by the state, this would not be a problem.

    For instance selling copper to it's own offshore subsidiaries for say $2,000 a tonne, so their subsidiary can sell it on the international markets for $9,000 per tonne, underreporting their real earnings would not happen if these companies were state owned.

    But we have been indoctrinated worldwide with the mantras of corporatisation:

    * Government is 'inefficient'
    * Government doesn't work
    * Government is corrupt

    They never say that you can say exactly the same about the private sector. There is plenty of inefficiency, disfunction and corruption going on in the financial sector or even the private mining sector.

    What I really object to is that not only does this setup expatriate billions of dollars a year. It is also that privatisation is an excuse for the government not to run it's parastatals in a professional manner. That means we are not building up the expertise, management experience, that goes with well run companies.

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  10. It's nice rhetoric from the PF, asking the Government to "do the right thing". What is interesting, is that the treasurer of the PF didn't vow to reverse it, like the Republicans in the US did to reverse "Obamacare".

    To those that oppose the windfall (and as you know I'm not one of them), what is sad is that neither party will do what is being asked of them. Even if, one day, there are enough reasons to reverse the decision, it is sad that both sides of the floor are too stubborn to really think things through carefully!

    My solution: fewer older politicians and more young ones! It's having a dramatic effect in countries like India, and hopefully more young Zambians will realise that having leaders that live twice the average life expectancy in the country sends the wrong signal!




    YM
    LSK

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  11. Dr Mpande urges removal of MMD over windfall tax.


    “The government is like an estate agent and if you have an estate agent who cannot collect rent, what do you do with them? You fire them,” Dr Mpande said.

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  12. In an interview, Ambassador Mtesa, who is also the executive chairman of the Zambian chapter of CUTS International, said there was urgent need to revisit the current mine taxation.

    Ambassador Mtesa regretted the government’s continued resistance to calls for increased revenue collections.

    “…By the time copper prices would start cooling down, the foreign mining ‘firms would be laughing all the way to the bank’ while the country would have nothing to show for the copper extracted,” Ambassador Mtesa said.

    He observed that although the current surge would boost investor confidence into the country’s main economic stay, it was poor judgement for the government not to tax them properly to make “hay while the sun shines”.

    “I know it is important to safeguard investments but the large corporations should also not be allowed to milk the country instead of helping it to grow,” Ambassador Mtesa said.

    “If they the government don’t like the word windfall tax, let them replace it. It doesn’t matter if they change the name, but whatever they will come up with should translate in increasing revenue collections to improve the lives and welfare of the people.”

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  13. Judge asks ZRA to educate public on variable profits tax
    By By Abigail Chaponda in Ndola
    Sun 16 Jan. 2011, 03:59 CAT

    NDOLA Judge-in-Charge Munalula Lisimba has requested ZRA to educate the public on variable profits tax and give reasons why it is more preferable in Zambia than windfall tax.

    During the ZRA Copperbelt sensitisation workshop for the Judiciary at Mukuba Hotel in Ndola yesterday, judge Lisimba said taxes were important not only to the government that needs to raise the revenue to finance its operations but also to people who benefit from the revenue collected.

    Read more...

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  14. 9th February 2011 Edition of the Post News Paper makes interesting reading too.

    Now if the mine can cook books to say it sold copper at 25% the actual price, it means that it evaded 75% of tax since volume and selling price is lineally related to profit and consequently to tax on profit. Of cause it’s not as simple as that because the variable profit tax is an extra or windfall tax on mining profits. Variable tax is calculated as an extra 15% that companies pay on profits that exceed 8% of their overall income. This is in addition to the standard 30 percent corporate tax. All a cheating mine does is cook books by pushing up cost figures or by saying it sold at a lower selling price preferably under an “old” contract with copper buyers far less that the current London Metal Exchange prices. Such a mine can be hostile towards the auditors and postpone the audit exercise and refuse to answer queries despite the exercise being undertaken is in accordance with the ZRA Act. Now if you put this variable tax into consideration, it means the mine evaded paying more than 75%. This vindicates Matthias Mpande, lecturer in the School of Mines at UNZA who said the variable tax is not a good tax mechanism because the mines are making huge profits, but disguise the revenue in the consolidated financial results, and it is difficult for ZRA to calculate the actual taxes.

    This is the reason why we advocate for reintroduction of windfall tax because it’s easy for ZRA to ascertain the tax due and its self regulatory without chocking the mining firms as evidenced in Zambia’s revenue earnings from copper sales in 2009 which fell to $2.9 billion from $3.6 billion the previous year despite increased output. That decline in earnings was a direct result of lower prices for the metal, which plumbed a low of $3,000 per tonne in the first quarter of 2009.

    If my maths is correct, ZRA should be able to collect far more than $400 million in mining taxes annually through windfall taxes if reintroduced. But how much are we collecting now? Well $77.1 Million and this figure also includes arrears from the windfall tax. So in essence, we are getting less than $40 Million. We are actually only getting 10% of what we could have got and this is a merger 2.67% of value of exported copper.

    How can we talk about development when government pays a blind eye to multinational companies that conceal the true value of their operations with a mixture of secrecy and flawed laws passed by parliament depriving our country of revenue? Doesn’t government need a sizeable level of revenue to run and also invest in the social sectors of the country? May be not. May be it needs a sizeable number of individuals with pockets to be filled in by kick backs from multinationals to run government?

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  15. Cho,

    Here is a contribution from economist Chibamba Kanyama in the Lusakatimes. He states categorically that ZCCM-IH should have a much larger percentage of shares in the mines, so it has control over dividend policy. (Can you say - 51% Zambian ownership? :) Again, President Mugabe leads the way. If it wasn't for nationalist leadership, there would be no leadership at all - no double meaning intended.)

    From the Lusaka Times:

    And Mr. Kanyama has observed that Zambia’s threshold of shareholding in mining companies is very weak adding that this trend has weakened government’s control on the mining sector.

    He says if the government is to maximize value for the mining sector; it has to increase its threshold in order to have a stronger voice to claim for dividend pay outs from the mining companies.

    The economist has also blamed the mining companies for the ongoing debate on the reintroduction of the windfall taxes.

    He says mine owners have been negotiating in secret on the matter and has challenged them to out in the open and explain the logistical problems that make it difficult for them to accept windfalltaxes.

    Mr Kanyama was speaking on QFM’s morning breakfast show this morning.

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  16. Interesting thoughts on share holding from Chibamba Kanyama who said, “If the government is to maximize value for the mining sector; it has to increase its threshold in order to have a stronger voice to claim for dividend pay outs from the mining companies.”

    However my understanding is that history has reviewed that partial nationalization lowers productivity. Complete nationalization makes things worse. Look at this:

    Copper production was on a steady rise from 1932 to 1971. Somewhere, in the early 70s, KK embarked on a partial nationalization of the mines in order to break the social classes and insure equitable distribution of wealthy. It’s unfortunate that the KK government viewed with suspicion the private sector as it was dominated by white foreigners. Now we have learnt a lesson that It’s not by confining one’s neighbor that one is convinced of one’s sanity. Regrettably, large scale non-mining enterprises were nationalized through Mulungushi reforms of April 1968 where government equity holdings were peg at 51% in a number of key foreign-owned firms. By January 1970, Zambia had acquired majority holding in the Zambian operations of the two major foreign mining corporations. This coincided with decline of production of the early 70s. To add salt to the injury, copper prices on the international market went down in 1974 until LPM era. This defeats what Chibamba Kanyama is advocating for.

    What is interesting is that there was a further steep decline in copper production in 1982 with complete nationalization forcing the government to start subsidizing the mines to overcome low mineral revenues against a huge mine labor force. Against such phenomena, there was no reinvestment in mining infrastructure. This lead to World Bank and IMF demands on the Zambian government to privatize the mines as a precondition for foreign aid.

    Now the mines are privatized and copper production is again increasing. From the statistics given above, it’s clear that low production was directly related to nationalization. Thus the best way to run the mines is to let them be in private hands.

    But how do we insure that the Zambians benefit from the mining sector? Well you might say that the mines should be paying taxes. But I say not variable profit tax but windfall tax. Come on, let’s face it. The mines are not contributing much to the central treasury through variable profit tax. They evade tax through cooking books and selling at lower prices to holding companies or other subsidiaries abroad. The idea of increasing share holding is not make sense here as in this manner, they also evade declaring correct dividends as they show less profit. As for lowering workers salaries if Windfall tax is introduced, the mines are paying most Zambians less than the threshold for tax (K500,000) as there is a lot of casualization. It’s disheartening to know that ZRA is not for Windfall tax. ZRA is just toying RB’s line of argument. If the mines and Government perceive Windfall tax as a burden that can suffocate industry, why can’t government re-adjust windfall tax through the percentage of the price of copper per ton at LME to be paid in the triggering bands of Windfall tax and reintroduce it? It only shows that there are other interests than what meets the eye.

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  17. gentlemen much respect to all debating this subject.

    firstly,MNC are very difficult to police as they are all oevr the place and they can hide their activities without a competent accountant noticing veins of numbers.

    what am saying is.
    1. it's not against the law to sell there product at what ever price to any one?
    2.zambia owning a percent as MR. KANYAMA suggest is the old way of dealing with the new world of globalisation. If we did that we would have no investors to equip us with much machines,resources,etc.
    3. Sichinga is propounding a point as to why any person would have a ...., the problem is mr.
    4.DR. Mutesa talks about under valuing invoices,any businessman that is worth his salt will find a way to reduce his TAX liability.

    my question is who is advising guys at finance?
    LEGALLY THIS TAX HAS FAR REACHING IMPLICATIONS THAN WE CAN IMAGINE.the consequence is we are losing out on revenue.

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  18. Can't this educated fool not simply keep his mouth shut, so he won't embarass anyone? Maybe he is working for the PF, and helping them win the 2011 election.


    Government maintains stance on windfall taxes
    Tuesday, March 8, 2011, 8:13

    Government has maintained its stance that it will not re-introduce the windfall taxes on mining companies. Finance and National Planning Minister Situmbeko Musokotwane said the windfall tax was an illusion and a mistake on the part of government.

    Dr. Musokotwane said the scrapping off of such taxes on mining companies has been done in the best interest of the mining sector in the country.

    The minister said the move will in the next five years trigger about one third of government’s revenue collection from the mining sector.

    He has assured Zambians of a fair share of wealth in the mining sector through other taxes that exist adding that it will not be fair to impose exorbitant taxes that no other country in world charges.

    Dr. Musokotwane said government will be creating a problem by overcharging mining companies as this will discourage investment in new undertakings.

    The minister was speaking last evening when he featured on a QFM’s Monday Nite Live program.

    QFM

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  19. 'A tax levied by governments against certain industries when economic conditions allow those industries to experience above-average profits. Windfall taxes are primarily levied on the companies in the targeted industry that have benefited the most from the economic windfall, most often commodity-based businesses'

    Therefore by definition I find it hard to understand what the Government of Zambia is doing or has been doing since.

    Is it a question of the presidents being stubborn? Because clearly he the president does have advisors.

    This now brings me to the question of how a Zambian citizen can have any influence on the decisions made by the government, if he the president does not even listen to top economists in the country like a few named above in this article..... I feel like the only time people in Zambia have a voice is every five years when they vote for a new government. Immediately they are put in power, there is no more dialogue between the general public and the ruling party. None at all...How does that define democracy? It beats me....

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  20. Cat now larger than bag, film at eleven. What exactly constitutes a windfall price for copper these days? For Chile it is based on both the size of the mine and how expensive it is to get at that particular ore deposit in practice. They have a rather complex regulatory oversight formula for this, but the result is that marginal or smaller domestic mine operators are not penalised while maximum rents are extracted from the most profitable deposits. This also helps to maintain employment during periods of low mineral prices without changes to the tax code or compensation terms.

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  21. On the right and opportunity of the state to get out of stability agreements and levy effective taxes:

    Zambia Social Science Journal
    | Number 1 Volume 1 Article 7
    5-1-2011
    Stabilisation Clauses and the Zambian Windfall Tax
    Sangwani Ng'ambi
    University of Zambia

    Thus far we have seen case law that leans more in favour of the rights of the investor to the detriment of State sovereignty. However, the decision in Texaco can be contrasted with LIAMCO v Libya10 where the arbitral tribunal held that Stabilisation clauses do not affect the state’s sovereign right to expropriate a contract. To hold otherwise, in their view, would amount to an intolerable interference with a state’s sovereignty. This case represents a recognition that arbitral tribunals can take into account the sovereignty argument.

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