Sometimes I weep when I read what is written in our newspapers and the lack of critical thinking in Zambia. Sometime back the Chamber of Mines got together with the Government and released an "independent report" done by ICMM called 'Enhancing mining's contribution to the Zambian economy and society'.
For those who don't ICMM, it's full title is the International Council on Mining and Metals . It was formed in 2001 "to represent the world's leading companies in the mining and metals industry and to advance their commitment to sustainable development".
So let us get this right. The Chamber of Mines, which is effectively the mines, gets together with Government run by PF, which I am sure gets significant campaign finance money from mining companies. There's no campaign finance regulation in Zambia, so we can never know for sure. What we do know is that some of PF's influential members allegedly have significant shares in mining companies. They then get ICCM a mining body to do a report about mining.
Surprise, surprise! The report concludes that mining taxes contribute around 32% to total government tax revenue. At this point everyone gets excited and the talk of higher mining taxation dies down. What they forgot to tell you of course is what they mean by "mining taxes". The 32% inclues PAYE [paid by the workers]. As the then Finance D Minister Miles Sampa said in August 2012, "PAYE is tax paid by workers and when this is removed from their tax bracket, the mines contribute very little to the treasury".
Miles Sampa was nearly correct. I say nearly because even if you include PAYE we are still getting less than 10% of total mineral export revenue. If you consider subsidies on electricity, no duty on fuel, large environmental impact, casualisation, etc, we look very foolish indeed. That is before you consider that our precious stones are not even taxed properly or controlled. And of course profits are kept abroad. We are losing out big time. As things stand it is certainly more money in foreign pockets.
As this chart shows the "mining rent" to Zambia or the pure mining taxes are just 8%. The rest are ordinary taxes every company pays. This is a travesty. We have some of the most precious minerals in the world and we only get 8% for owning them. Unfortunately, every time someone reasonable raises a complaint we have a whole army of gullible journalists giving government poor analytical cover. Some journalists are on the books of mining companies to champion their propaganda.
Economist | Consultant
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