By Nation Reporter
MAXIMISING tax revenues is not wrong, but hitting current taxpayers hard discourages economic activity and new investment, says Zambia Chamber of Mines (ZCM) president Nathan Chishimba.
Mr Chishimba said hitting hard the current taxpayers would not only discourage investment, but ultimately stunt future tax revenues.
This is according an in-depth article published this week in the Mining for Zambia.
“As a nation, we are inclined to view economic development and the eradication of poverty through the narrow prism of tax receipts and government expenditure… rather than through the wider perspective of economic growth and employment,”
“It’s not wrong to want to maximise tax revenues – after all, they fund the essential operations of government. [But] hitting current taxpayers hard discourages economic activity and new investment, and ultimately stunts future tax revenues,” he said.
Mr Chishimba also emphasised the importance of the Zambian tax authorities being able to monitor and collect all taxes owed.
“This is why we in the mining industry are now strongly supporting programmes designed to build institutional capacity and increase information transparency, such as the EU-funded Mineral Production Monitoring Support Project,” he said.
Meanwhile, the article showed that at a time when Zambia, and many other countries, were trying to maximise tax revenue from big foreign companies, Ireland was doing the exact opposite.
According to the article, country’s finance minister, Michael Noonan said his government would fight back when the European commission ordered Ireland to collect €13 billion in disputed back-taxes from tech giant Apple, which had operations there.
“We will fight it at home and abroad and in the courts,” he said.
The report adds that lower tax means higher economic growth: “Evidence based on a wide number of countries indicates that a 10 percent reduction in corporation tax could have anywhere between a 0.6 percent and 1.8 percent effect on economic growth rates.”