Establish a Mineral Audit Agency – CUTS International, Urges Government

Taxes world over are mainly levied in order to raise revenue to fund government developmental operations and assist to reduce disparity between the rich and the poor by reducing reduce poverty. There has been an outcry by the public in Zambia that there has been low contribution of the mineral sector to government revenue due to poor tax systems for mines. It’s for this reason that government through the mines minister recently made a pronouncement that mining companies would now be required to provide information on tonnage, type and grade of ore mined, and the end product, this is in the outlook to boost compliance and revenue collection.

CUTS Lusaka commends the move by the government to tighten mines regulations but feels that this move will only be successful if the Zambia Government adopted the move by the Tanzanian government to establish a “Mineral Audit Agency” or something similar. The mandate of such an Agency would be to monitor, and audit quantities, quality of minerals, financial and tax records of mining entities at all mining areas for large, medium and small scale miners. This agency should be a semi-autonomous institution.

The roles and functions expected to be performed by the envisaged agency as recommended by CUTS are as follows; (1) monitoring and auditing production and export of minerals on a daily basis (With regards to monitoring, the agency should have a laboratory to determine the quality and quantities of minerals exported), (2) Auditing financial records of mining entities to gather taxable information (collecting, analyzing and disseminating mineral production and export data), (3) Examining the implementation of feasibility studies, mining programs and plans (4) Counteracting mineral illegal trading and smuggling; and loyalty evasion practices (5) promote Research and Development in the mineral sector leading to increased government revenue. The agency should be given administrative powers to fine those who will be offenders.

It is CUTS view that the establishment of this agency will eventually lead to increased revenue collection and provide accurate and reliable data on minerals produced and exported by our beloved country.

With regards to the Tanzanian Mineral Audit Agency, it has scored a number of achievements since its establishment in 2009. The achievements are as follows; more taxes are now being paid by the mining companies’ especially corporate tax, more royalty payments, Enhanced trust by public on the way government administers the sector, minimized public outcry, minimised erroneous declaration by mining companies, enhanced voluntary compliance by mining companies, upfront capturing of mineral production and export data and enhanced reliability of data kept in government data base.

CUTS recommend the establishment of this agency with great emphasis as this agency by itself is the needed long-term solution for the drawbacks and uncertainty surrounding the mining industry.