An economic think tank in Africa’s, second largest producer, Zambia has urged the mines to refrain from arm twisting the state using lay – offs to counter the proposed 2019 tax regime proposal. The Economics Association of Zambia – EAZ stated in a press release responding to the Chamber of Mines statement that the new mining tax regime for 2019 could lead to 21,000 layoffs and $500 million decrease in investment spending over the next three (3) years.
“The mining industry remains the most important industry in Zambia and a significant contributor to 75% of foreign exchange earnings. The mining industry unlike other industries is very strategic and produces goods that are non-renewable. Against this backdrop, it is very important that the sector contributes significantly to Zambia’s economic development through job creation, tax revenue and linkages with other sectors,” the EAZ carried.
“Zambia has one of the most favorable investment conditions in the world for the mining sector. The number of incentives such as electricity and fuel subsidies, tax and non-tax incentives have come at a great cost to the nation. It is therefore unfortunate that the mines remain uncooperative each time a new tax regime is proposed to enhance revenue collection from the sector.”
“We would like to state that employees should not be used as a tool for arm-twisting Government. The current mine tax regime is not progressive as it allows for exploitation Zambia’s mineral resources. It is also unfair to reduce mining activities and capital injections into the sector at a time when metal prices are favorable. Halting mining operations in Zambia is equivalent to economic sabotage and it should not be tolerated especially that over 75% of foreign exchange inflows come from the mining industry,” the EAZ said.
The Association stated that Zambia is not the only country in Africa to tighten its mine tax regime so as to plug any revenue leakages. Other nations such as Botswana, Tanzania and recently DRC enhanced their tax regimes significantly.
The EAZ is currently preparing an advisory note to the state to ensure that marketing and sales of part of our mineral resources is done locally. This will ensure that a substantial amount of foreign exchange flows through the Zambian financial system.
