Levy: Tax legislation in Parlt this week

The Times of Zambia reported on Friday that one mining investor has complained to the Zambian Government against the proposed new mine tax regime, and that Government will move ahead with new legislation anyway.
"There has only been one mining company which has written to me complaining about the new tax regime," he said, adding that next week a Bill would be introduced in Parliament for the House to deliberate on to ensure the proposed mining tax regime became Law. The President, who is at the African Union Heads of Summit conference in Ethiopia did not disclose which company was involved.

The Lusaka Times reports that at the same meeting the President held private bilateral talks with World Bank President Robert Zoellick. Briefing journalists shortly after the meeting Commerce Minister Felix Mutati said the meeting focused on support for Zambian flood recovery programmes. The Lusaka Times reports, "the World Bank also wanted to know about Zambia’s mining tax regime, to which President Mwanawasa explained that the mining sector was key to Zambia’s economic development and that it was imperative for the sector to contribute a fair share to the economy particularly to infrastructure development like roads. The President told the World Bank Chief that Government’s action to revise the mining tax regime was in response to public outcry that Zambians were not getting a fair share of revenue from the mining sector."

Meanwhile The Post reports today that US Ambassador Carmen Martinez, in comments that broadly seem to endorse the 2008 budget, has urged Zambians to be 'patient with poverty reduction' programme. “There has been a lot of debate on the different levels in changes of VAT and PAYE, and various other things but all in all, I think that there are some very good things in this year’s budget,” said Ambassador Martinez. “Obviously, Zambia seems to be economically getting better but any leader, in government and civil society, acknowledges that you still have too many poor people... Hopefully, this new budget will be more acceptable and address the problem of poverty. It’s a lot of work and people need to be a little more patient,” The Post reports that Ambassador Martinez also said though the Pay-As-You-Earn (PAYE) adjustments appear to be insignificant, it could help reduce poverty and bring about changes in people’s lives.

“You are not going to see change overnight, the adjustment is small but it makes a difference. I know every individual would want a wide margin adjustment but what you would like to do is to have a strong economy and you need a bigger base to collect from,” said Ambassador Martinez. “Many countries make a mistake of raising their rates so high hoping to collect large amounts from a small base but it makes sense to have a large base and collect small amounts from each individual.” The interview doesn't directly address the question of mines taxation, but I read the comments as a broad endorsement of the realtively conservative approach by Government, not sending mineral royalites or other corporate taxes over international averages, and not splurging heavily on tax cuts for workers and poor consumers. As with almost all of the comments from donors that I have found so far, it seems they recognise the rights of the Zambian Government to unilaterally impose the new tax system on the mining houses, and offer little encouragement to opponents of the reforms.