By Nawa Mutumweno – Zambia’s tax revenues from copper mining has leaped by 46% to ZMK35 billion per month following the doubled mineral royalties which came into effect in April this year.
According to Finance deputy minister Miles Sampa, the government’s move to resist calls for 25% windfall tax and instead embrace the mineral royalties have started bearing fruit.
‘’The government has managed to obtain ZMK35 billion more from the mines due to the increase in mineral royalty tax and that represents an increase of 46% per month. The mineral royalty was definitely the better way to go because as soon as the copper is exported, the mines are taxed before any miner can even remove their costs, unlike the windfall tax which depends on profit. In terms of targeted revenues from the mines this year, we are within the budget and slightly exceeding,’’ he elaborated.
The windfall tax would not have achieved the increment coming from mineral royalties as most mines were currently recording losses. All mining companies in the country, except for First Quantum’s Kansanshi Mines, are still recording losses.
The increased tax revenues from the mining sector would help the government offset revenue deficiencies from reduced Pay As You Earn and also assist augment expenditure on infrastructure projects to spur employment creation.
The government’s quest to stabilise and reform the mining fiscal regime has brought about the non-implementation of ‘’drastic measures that might kill the goose that lay the golden eggs.’’
The royalties initiative which has been pegged at six percent will bring in the much needed revenue, increase social spending in a bid to enhance development.
The government introduced the windfall tax in 2008 but aborted the contentious tax a year later after copper prices slumped to about $2 900 per tonne.