The following excerpt was originally published by Business Day on 21 May 2019, written by Mathews Muyembe.
“The time is long overdue for Lusaka to stand firm in the face of intimidation tactics from mining giants grown accustomed to the state’s largesse”
Next month, Zambia’s newest mining tax regime will enter into force. According to claims circulated by multinational mining houses that dominate the country’s sector, the new legislation will spark “mass layoffs” and threaten a collapse of the nation’s economy.
But if we really want to have an honest debate about mining and social development, any objective examination of the numbers indicates precisely the opposite outcome.
The new tax regime, first announced by finance minister Margaret Mwanakatwe last September, aims to shore up Zambia’s foreign currency reserves and rein in debt to put the country on a path toward fiscal stability. With the IMF warning that Zambia’s fiscal deficit and debt load will preclude the country from aid programmes, the urgency of this long overdue reform cannot be overstated.
Mineral resources are non-renewable. Zambia’s copper deposits will not be around forever, and ensuring that the revenue from its extraction reaches the Zambian people is paramount. Accordingly, Lusaka is set to implement a 1.5 percentage-point increase in mineral royalty taxes, currently ranging from 4%-6%, with a ceiling of 10% only when copper prices exceed $7,500 per ton. These royalties remain far below the rates of comparable copper exporting countries.
Credit: Zambia Mining