THE new Mineral Royalty Tax (MRT) regime will enhance the collection of minerals revenue by the Government as opposed to the civil society organisation’s argument that the system is retrogressive and compromises mineral resource revenue collection.
Zambia Chamber of Mines president Nathan Chishimba said tax revenue was always generated over a long term which could happen only ‘‘if mining companies are incentivised to invest over the longer term.”
“One cannot separate mining tax revenue from mining investment because the latter ultimately produces the former. A good tax system balances these two competing objectives,” he said.
Mr Chishimba said MRT was a tax on production and not profit, saying: “It is pegged at a relatively low rate and is not designed to increase revenues in times of a commodity price boom. Governments collect most of their revenue [at such times] from profit-based tax, which is much higher.”
He said the Government was on the right track with the new MRT regime, and he, therefore, urged civil society to consider it from the larger perspective of ongoing investment, employment and economic development.
“One has to balance capitalising on favourable market conditions with having a thriving industry in the future, and the Government has very sensibly recognised this,” he said.
Mr Chishimba was reacting to civil society groupings such as ‘Publish What You Pay Zambia’ and the ‘Zambia Tax Platform’ that insisted that the new MRT bands were “retrogressive” and would “compromise” mineral resource revenue collection.
CSOs were of the view that the country’s mineral resources should be left in the ground for exploitation by future generations if current regulations were deemed too onerous by potential and current investors.
They further stated that Zambia needed to make the most of its mineral resources while they were available, claiming the mining in Zambia had been taking place for more than a century but had not been able to make the most of these resources after the privatisation of the mining sector in the 1990s.