‘Zambia needs to raise mining taxes’

LUSAKA – The World Bank said yesterday Zambia should raise mineral royalties paid by foreign mining firms and even introduce windfall taxes if feasible to gain more benefit from higher global metals prices.

New World Bank country manager for Zambia Kapil Kapoor said the mineral-rich southern African country should take advantage of higher metal prices and raise taxes so that its citizens could profit from the good prices. Last month Zambia’s finance minister Ng’andu Magande said the government had engaged a team of foreign consultants to help it renegotiate mineral royalties and taxes with foreign miners.”Given that commodities prices have gone up, Zambia needs to get high benefits from the increased prices,” Kapoor told journalists.”Zambia needs to raise the taxes, whether it is withholding tax or windfall tax because this is not unique to Zambia and it’s up to the government to decide what taxes it wants to raise (and) we really support that,” Kapoor said.Kapoor said the country required revenue to spend in social sectors and one way of achieving this would be through revenue raised from the mining taxes.Zambia’s government has previously said it wanted to raise mineral royalties to three per cent from 0,6 per cent and corporate tax rates to 35 per cent from 25 per cent.The country previously scrapped a 15 per cent withholding tax to allow mining companies some financial stability after they made huge capital investments in the country, which depends upon mining for much of its foreign earnings.Key foreign investors in Zambia’s mining sector include Canada’s First Quantum Minerals, Australia’s Equinox Minerals, London-listed Vedanta Resources and Swiss firm Glencore International AG.Although copper mining is the economic lifeblood of Zambia, some analysts argue the country does not reap enough benefit because the mines are owned by foreign companies.Nampa-ReutersLast month Zambia’s finance minister Ng’andu Magande said the government had engaged a team of foreign consultants to help it renegotiate mineral royalties and taxes with foreign miners.”Given that commodities prices have gone up, Zambia needs to get high benefits from the increased prices,” Kapoor told journalists.”Zambia needs to raise the taxes, whether it is withholding tax or windfall tax because this is not unique to Zambia and it’s up to the government to decide what taxes it wants to raise (and) we really support that,” Kapoor said.Kapoor said the country required revenue to spend in social sectors and one way of achieving this would be through revenue raised from the mining taxes.Zambia’s government has previously said it wanted to raise mineral royalties to three per cent from 0,6 per cent and corporate tax rates to 35 per cent from 25 per cent.The country previously scrapped a 15 per cent withholding tax to allow mining companies some financial stability after they made huge capital investments in the country, which depends upon mining for much of its foreign earnings.Key foreign investors in Zambia’s mining sector include Canada’s First Quantum Minerals, Australia’s Equinox Minerals, London-listed Vedanta Resources and Swiss firm Glencore International AG.Although copper mining is the economic lifeblood of Zambia, some analysts argue the country does not reap enough benefit because the mines are owned by foreign companies.Nampa-Reuters