If the mines find the new tax regime unbearable, they must pack and go, says Wusakile independent member of parliament Pavyuma Kalobo.

But the Zambia Chamber of Mines says it’s the mining tax policy inconsistency that is frustrating the investors, warning that even if the mining firms wholly comply with the new tax regime, government would still not realise the targeted revenue.

Meanwhile, the Zambia Chamber of Commerce and Industry (ZACCI) says Africa’s strategy of taxing itself to prosperity, is not logical.

And The Mine Workers Union of Zambia says the union supports government’s stance that the mines must pay more taxes whilst keeping all the workers.

Speaking at a public discussion forum organised by News Diggers and OSISA in Kitwe, Thursday, Kalobo said the mines were just exhibiting corporate greed by fighting the new mine tax regime.

“Fair taxes are the ones which are going to lead to more medicines in our hospitals, they are the ones that are going to lead to the students in the public and private higher learning institutions benefit from students’ loans. So where are we going as Zambians if we can’t advocate for lower taxes?” asked Kalobo.

“In 2016, from this mining sector, we lost more than 15,000 jobs. Is that a benefit? When we demand for fair taxes, we don’t need these mining companies to be stubborn or to show their corporate greed, it is just corporate greed that is at play. Because if you are talking about negotiation, that was the first thing that was supposed to come, not threatening or trying to arm twist government to say ‘we are going to trim labour’, I think me as a member of parliament, as a representative of the people, especially coming from Wusakile, a mining constituency, let them pack and go but they must leave the assets. If there is someone here who works in the mines, don’t be scared, no one is going to lose employment.”

But the Zambia Chamber of Mines said it was the mining tax policy inconsistency that was frustrating the investors, adding that government had in the past demanded more taxes from the mines, but failed to yield it’s targets.

“Increasing the tax rate won’t increase the amount of taxes we recover as a nation. This is not the first time government has tried to increase mining taxation. In fact, in 2014, the mineral royalty tax that was implemented was even higher than what’s been implemented today. It was eight per cent for underground and 20 per cent for open pit mine. That regime was in place and what government realised was that they were not getting more taxes, in fact, it was merely reducing output. What we are saying is that increasing the rate of tax won’t increase the taxes. If you want to get more out of the mines or the mining industry, you have to create circumstances and the right situations for the industry to grow. We are only producing 800 tonnes of copper metal at the moment, that is nothing. Chile has risen to 2.3 million tonnes per annum. There is no reason why we can also not get to 2.3 million tonnes. We can calculate how much income we can get from 2 million tonnes. We haven’t even reached one million tonnes, what we need is to grow the industry. Issues of taxation and the tax rate, we shouldn’t be talking about this after every budget,” Zambia Chamber of Mines president Goodwell Mateyo said.

“We had a tax measure that was working 18 months ago, if that was maintained, we demonstrated and showed government that they would have received an extra $280 billion in the Treasury by creating the right conditions for mines to increase production. Questions of the tax system should be standard and stable for five years. What the next discussion is supposed to be is what are the linkages between mining and the rest of the sectors in the country? That is now where we will enhance the contribution and where we will see even more value and benefits in our society from the social and economic point of view.”

Asked why the mines had u-turned on their decision to lay-off workers as a cost saving measure, Mateyo said investors had engaged government in negotiations.

“It has always been the position of the Chamber of Mines to pursue engagement with government. In fact, from the time that the budget was announced, the first thing that the Chamber of Mines did was to seek appointment, to see the government officers and say, let’s discuss this, this tax system is going to kill this country, we have seen it before, we saw it in 2014, it is what resulted in reduced production in the industry. In fact, the industry declined even worse than what we had anticipated. And even now, we have made efforts and said our willingness is to pursue a policy of engagement and dialogue with the government. And at the moment, it has been the position of a number of our members to say ‘once we are engaging in dialogue and having these discussions with government, it will not help anyone to proceed with the discussions and lay off jobs. It is a very painful decision to have to lay-off workers, even one worker. It is extremely disruptive to any operation to lay-off workers, which is why the first thing that most mines did was to look at the least productive areas of their operations and the first thing that went were exploration projects, those were cancelled,” said Mateyo.

Meanwhile, the Zambia Chamber of Commerce and Industry (ZACCI) said Africa’s aim, to tax itself to prosperity, was not logical.

“There is a saying that Africa tries to tax itself into prosperity, which is not the correct way to go. Don’t forget that when you tax, it’s for delivery of service across all of us as a nation and as a people, talk about infrastructure, roads, name it. We need to create more tax payers rather than just look at one tax payer who is the mines. We need to create people who will work for themselves,” said ZACCI president Michael Nyirenda.

And The Mine Workers Union of Zambia said the union was in support of government’s stance that the mines must pay more taxes whilst keeping all the workers.

“We have lost a lot of workers because of the taxes. From the workers’ perspective sometimes we have been supporting the mines when there is issues of tax. But again, when there is a drop in price, the people that are affected are the workers. The mines always find it easy to reduce workers at the expense of other costs, including the expatriates. Because at times we say can we look at how much expatriates take in terms of the wages, compared to the Zambian workers. In most cases, you find that the wage bill is very much higher on the expatriates. Now why should we be the ones that are being sacrificed?” asked MUZ president Joseph Chewe.

“Now coming to the recent one on taxes, the stance that MUZ took is that can we also get enough taxes from the mines and at the same time can we keep the jobs. If you look at the jobs we have today, most of them are contracted, most of them are not decent. So now they (Chamber of Mines) have realized that the stance that government took, the stance that the workers took, we are moving in one direction and this is good for Zambians, the workers and the country. The rate at which we are mining is so high, we will have pits and nowhere we can point to say this is the money that we got from the mines.”

Members of the audience, including mining engineering students from the Copperbelt University as well as a multitude from the National Democratic Congress party demanded that the mining companies pay fair taxes, but warned government that running an economy through taxes would be catastrophic.