State unmoved by companies' tax proposals

The Daily Mail seems to be the only Zambian paper already reporting today's Parliamentary hearings online.

Mining companies yesterday submitted their counter-proposal on the new tax regime in which they agreed on the three per cent mineral royalty but objected to the 25 per cent windfall tax in preference to 12.5 per cent.

But Secretary to the Treasury, Evans Chibiliti, said Government would look at the mines’ proposal but would go ahead to enact all the proposed bills on tax. And Government yesterday presented the Mines and Minerals Development Bill to revise the law relating to mining and processing of minerals.

Submitting the counter-proposal to the parliamentary expanded committee on estimates and revenue, Chamber of Mines of Zambia general manager, Frederick Bantubonse, said the mines would only accept the introduction of either the windfall tax or variable profit tax and not both.

But Mr Chibiliti, who was accompanied by Ministry of Finance and National Planning permanent secretary for budget affairs, Emmanuel Ngulube, said cabinet had already directed him to start implementing new tax measures starting on April 1 this year.

He said the decision to come up with a new mining tax regime, was made by Cabinet and that neither he nor the Minister of Finance and National Planning, Ng’andu Magande, had the mandate to change anything.

“The mines should have faith and confidence in us because we have worked with them for a long time. We are not out there to destroy them but we mean well,” Mr Chibiliti said.

Mr Chibiliti said Government was aware that the mines had hired consultants who were making tax calculations for them and urged the mines to consider engaging their own accountants because they understood their operations well.

And when committee chairperson, Godfrey Beene, asked him about Government’s stance on the possible litigation the mines might take, Mr Chibiliti said Attorney-General, Mumba Malila, was ready to defend the tax regime in court.

“The interests of the people override the fear for litigation,” Mr Chibiliti said.

Earlier, Mr Bantubonse said although the mines agreed on the three per cent royalty, they, however, wanted it to be graduating between one and three per cent.

He told the committee that the chamber was against the proposed 30 per cent corporate income tax but wanted the current 25 per cent to continue.

And the mining industry being capital intensive, the chamber was against any changes to the capital allowance structure and recommended a continued reduction of 100 per cent of the capital expenditure during the year of incurrence to maintain viability of investments and companies’ ability to fund the same.

The chamber also objected to the proposal that withholding tax should be levied as indicated in the Customs and Excise Amendment Bill of 2008.

Mr Bantubonse said the levies should be deferred until sufficient smelting and refining capacity was successfully commissioned within Zambia that could process the entire quantities of concentrates, reverts, copper, mattes, unrefined copper, copper waste and scrap.

When Patriotic From member of Parliament for Lusaka Central, Dr Guy Scott, asked why the chamber had made a counter proposal late, Chamber of Mines president, Passmore Hamukoma, said they did not have enough time to meet all their members.

Mr Hamukoma said the proposals submitted to the committee did not reflect all mine owners’ views because some of them could not agree with them.