The Post reports that the Parliamentary Select Committee appointed to consider the 2008 budget, and which recently heard the mining companies attack the Government's proposed tax reforms, has dismissed the companies' objections.
The select committee stated in its final report, "your committee strongly urges the government to relentlessly pursue the matter until the Zambian people get what is rightfully theirs from their natural resources... Noting that the exploitation of the country’s mineral resources should primarily benefit Zambians, which has not been the case in the past, we strongly support the proposed new fiscal regime in the sector as it is in the interest of the country.... The statement that the new tax regime proposes an effective tax rate of 79 per cent is also misleading. In fact, your Committee understands and agrees with the government that the effective tax rate will be around 47 per cent.”
The Governmnt also won important backing from high-profile donors, with UN resident coordinator Aeneas Chuma saying “The government has the sovereign responsibility to raise and mobilise resources aimed at helping it plan the development of this country and make investment coming in the country better, necessary to uplifting the welfare of the people... And a lot of partners feel that the government has done enough research to establish that there is enough space for the government to collect a fair amount of revenue not just from the mining sector but also all sectors including the citizens of the country… and that is its legitimate function of the government.... We feel that there is still an opportunity for the mining sector to realise a reasonable rate of return on their investment even after the new fiscal regime and also enough space for the government to get fair amount of revenue from the (mining) sector.”
Meanwhile, British High Commissioner to Zambia Alistair Harrison described the decision by the government to increase tax in the mining sector as “a noble move.” He said the British government fully supported the reforms especially because they would enhance the government’s efforts in alleviating poverty. “We support the government in its quest to get a fairer deal out of the mines. These are the resources meant to benefit the citizens,” High Commissioner Harrison said. “It is a good move the government has made and I think the position of the British government has been made clear.”
Well, certainly, it's now clearer than it was last week when, as minewatchzambia reported last Thursday, DFID Zambia made a statement to the Daily Mail confirming that the British Government is one of the two co-operating partners who provided financial assistance to the Zambian Government to obtain its own independent technical and legal advise on renegotiating Zambia’s mining development agreements. However at that time, DFID also stated it would wait for further clarification of the precise nature of the new regime before responding to it.
Perhaps the evidence offered by Government spokespeople to the Parliamentary committee was all the information the UK required. Or perhaps, as I've been arguing over the past few weeks, this process is more political than legal or technical. The support Government has been securing from across the Zambian political, intellectual and social spectrums, particularly the intervention by opposition leader Michael Sata, make it increasingly impossible for the Government to back down or to water down their proposals through negotiation with the companies. The fact that, a few months ago, imposing a unilateral solution was a red line donors said the Government should not cross, and now they are coming in behind precisely such a proposal suggests how effective the political mobilisation of Zambians has been in strengthening the Government's hand and how effective a partnership between the state, civil society and opposition political voices can be.
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