New mining tax regime a good beginning – Chitala

THE new mining tax regime announced by Minster of Finance Alexander Chikwanda in his 2015 Budget has answered some of the cries of Zambians who want to see an equitable and fair taxation of our base metal mining operations, veteran politician Mbita Chitala has observed.

Dr Chitala said although the new mining tax regime would not apply to the mining of industrial minerals, it was encouraging that the regime was intended to benefit the country.

He said it was ‘‘progressive’’ that the new mining tax regime would not be applicable to industrial minerals because most miners were in the category of small businessmen.

Making an analysis of the new mining tax regime announced by Mr Chikwanda on Friday, Dr Chitala said it was encouraging that the regime would take care of new businesses without development agreements so that businesses such as cement and limestone manufacturers as well as manganese miners were protected.

He stated that the exemption of small mining investors was without doubt a good policy that would enable the middle-class to continue accumulating investable surplus for expanded production.

“It is good and progressive that the new tax regime will not be applicable to industrial minerals. It should be noted here that most miners in the above category are small businessmen. It also includes new businesses without development agreements to protect them such as cement manufacturers, limestone miners, manganese miners in Luapula and so on.

He said the new mining tax regime would take care of base metals such as copper, cobalt and even gold as well as energy minerals such as coal, uranium and any other mineral that was used to generate energy.

“This is as it should be. Those corporations that extract natural resources such as petroleum or diamonds or copper can only be fairly taxed via sharing their production and not via taxing their profits. This is what happens in all resource-rich countries,” Dr Chitala said.

Dr Chitala has predicted that the mining companies, particularly those with development agreements would protest and resist the new mining tax regime

He said it was unconstitutional for government to have agreed to uphold the tax regime for 18 years adding that he was foreseeing a situation where mining companies would argue that the mineral royalty for open cast mining operations as a final tax had jumped to 20 percent from 6 percent.

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