By KENNEDY MUPESENI –
THE Economic Association of Zambia (EAZ) has advised that the country should revert to profit mining tax to prevent any pullouts by mining companies.
The new tax system has seen mineral royalty increase from six to eight per cent for underground mining and 20 per cent for open pit mining, which has unsettled the mine owners.
EAZ vice president Bob Leibenthal said the gross mining revenue based tax would pose a challenge to high cost mining houses.
He said this when he appeared on Muvi Television’s Sunday Interview programme titled, “ Zambia’s Economic Outlook”.
“Introducing gross mining revenue collection rather than profit tax is going to be a bit difficult for high cost mining projects to survive.
Some mining companies are threatening to close like Lumwana,but it is a complex issue especially that some companies such as Lumwana have been having problems way back before the new tax regime was introduced,” Mr Leibenthal said.
He said it was encouraging that negotiations between the Government and mine owners were underway to find an amicable solution.
Mr Leibenthal said it was better to maintain the tax system that included profit tax.
He said countries like Chile had maintained the profit tax despite fluctuations in copper prices and had been to continue production and mine sustainability.
He said failure to adequately tax the mining houses prompted the introduction of the new mining tax regime but that there was need to create capacity in the Zambia Revenue Authority (ZRA).