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Monday, 17 January 2011

ZIPPA on "Taxing the Mines"

The latest ZIPPA report focuses on the controversial issue of mining taxation. It seems to capture a diverse range of opinions, a practice in much demand in other forums. I will try and extract one or two for broader discussions.
ZIPPA Journal Jan-March 2011 - Taxing the Mines

1 comment:

  1. Most of this seems to be recycled from elsewhere. The last one does not have much relevance to the debate, although it is ZIPPA’s baby so I can see why they want to plug it …

    Two points:
    The Rationale of the Current Mining Fiscal Regime in Zambia – this is new (I think), although it is the same line that the government has already given. It glosses over such issues as why the 2008 tax reform was so badly implemented. For instance, why was the windfall tax and variable profit tax levied at the same time? Why was the windfall tax not made deductible, and hence lead to the problems that Ngulube states?

    Mining Taxation by Chamber of Mines – This is the exact same presentation that the Chamber make at every one of its sessions. The general information on mining is correct. But the section ‘Contributions to the economy’ is rather faulty. The mining sector pays almost no import or export duties, and it pays no VAT (since it is an exporter, so received refunds on its inputs instead). Given the high capital intensity of mining operations I also doubt that there are many linkages with the domestic economy – Zambia is not particularly good at producing high quality mining drills. The statistics show a high level of domestic purchases, but these domestic firms mainly import the goods and sell them on to the mines, there is not a lot of value added in Zambia.

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