Listen to the people over windfall taxes- CUTS International urges government

The Zambian government should seriously consider the many concerns being raised, not only by Zambians, but also by a good number of cooperating partners over the re-introduction of windfall taxes or considering hiking the mining taxes being paid by the mines.

CUTS-International Lusaka board Chairman, Ambassador Love Mtesa says by instituting the reintroduction of windfall taxes or raising mining taxes, Zambians would be able to get a fair share of proceeds from natural resources mined in the country.

He added that it was common knowledge that the country’s national wealth must benefit Zambians more than anyone else.

Ambassador Mtesa firmly believes that serious and genuine investors could not be scared by the re-introduction of windfall taxes as they would still greatly benefit from profits. “The windfall tax must be reinstated unconditionally because it was revenue on excessive profit on a graduated basis of copper prices”.

“The government must appreciate that windfall and variable taxes introduced by late President Levy Mwanawasa after so much campaign were designed to enable Zambians benefit from the soaring copper prices and super profits earned by mining companies” he said.

He noted that while the Zambian government was dragging its feet over the re-introduction of the windfall tax, other countries such as Chile, Democratic Republic of Congo were making serious efforts to come up with mechanisms to generate more resources for workers, communities and their infrastructure development programmes.

Ambassador Mtesa has further advised government to also consider learning from Australia which had introduced a 40 percent on super profit by mines effective 2012 stating that these were the kind of efforts that should be replicated in a country like Zambia both in short and medium term.

He further added that there was need for the government to also consider implementing key provisions of the amended Mines and Minerals Development Act to enable communities benefit from mineral royalties and to clearly define policy on the use of the resources in order to promote national development.

And CUTS-International Lusaka programmes officert Simon Ng’ona has indicated that the failure by government to reach the mark up allocation of 10% to the agriculture sector as indicated in the Maputo declaration shows the true picture of government’s laxity to diversify the economy and make the sector excel beyond its current state.

“The question that ensues is that do we commit to these initiatives for the sake of image building to the international community, which is at the expense of ordinary people and development, or what, “he said.” The song of making the agriculture sector, a viable sector to meaningfully contribute to the much needed revenue gains for this country seems to be shrouded in mystery”.

He added that the country has also been wavering to commit to programmes like the Comprehensive Africa Agriculture Development Programme (CAADP) programme, being spearheaded by COMESA in region which is aimed at reinforcing the Maputo Declaration.

“The only way the agriculture sector will flourish is through the allocation of more resources, even beyond the Maputo commitment. These resources can to a greater extent be raised locally, especially from the extractive industries, through the re-introduction of windfall taxes or raising mining taxes, “he said.

“Zambia should learn from countries like Malawi which has done relatively very well by committing more resources to the agriculture sector. The country is thriving at both international and domestic levels because of its fiscal commitment to the agriculture sector. Zambia is now, to a grater extent, trying to replicate some of the models which seem to be working in Malawi like the “one village one product movement concept” but for such concepts to work, more resources need to be pumped in the sector, “he said.

By signing the CAADP compact, the Government of Malawi committed itself to sustain or increase the CAADP recommended 10 percent of the national budget to the agriculture sector, with the view to achieve at least six percent agricultural growth. However Malawi is well above the CAADP target with an eight percent growth and 14 percent of the national budget going to agriculture. The sector generates about 80 percent of foreign exchange for Malawi and subsequently 39 percent of the Gross Domestic Product (GDP).

Mr Ng’ona said the economic planning for 2011 should have been seen as an opportunity to address the inefficiencies that has beset the agriculture sector.