The Centre for Trade Policy and Development (CTPD) has called on Government to withdraw the suspension of the 15% export tax on gemstones and precious metals.
Two weeks ago, government suspended export duty on precious stones and metals.
CTPD Extractives Research Associate, Stephen Kambani, says the decision to suspend the tax undermines Zambia’s capacity to maximize long-term benefits from its mineral resources and weakens the country’s efforts to promote value addition in the mining sector.
Speaking to One Love Radio news, Dr. Kambani said that CTPD believes that consistent application of export taxes is critical in encouraging investment in local value addition and enhancing revenue collection to support Zambia’s economic development.
“Taxes are the main source of government revenues used for financing its budget including health, education, defense and infrastructure programs,” Dr. Kambani noted.
He highlighted that the ultimate goal of any government’s mining tax system is to ensure the greatest possible benefit for the public while simultaneously encouraging investment in the sector.
“Given that mining is wasting asset, that is, the resource is non-renewable, a responsible government does not have the luxury of post-ponding or giving tax waivers to a mining company, because this has the potential to severely undermine benefits that may accrue from the sector,” Dr. Kambani said.
He further said that for a mineral dependent country like Zambia, whose main source of export revenues are minerals, capturing these taxes, is a matter of survival for the country’s national economy.
He added that the government’s strategy should be to maximize revenue from the mining sector over time. Achieving this requires realistic consideration and careful balancing of the objectives of the two key players: companies and governments.
Dr. Kambani said that maintaining a stable tax policy environment is a precondition for a predictable investment climate which is good to both the government and mining companies.
And Dr. Kambani emphasized that to justify the suspension of export tax on gemstones and precious metals that Zambia does not have the local capacity to add value is not only narrow but also seriously undermines the country’s ability to maximize benefits from its resources over time.
“Government must realize that it is through a consistent application of the export tax that will over time encourage investment in value addition. No one should expect benefits of value addition in the short term but definitely in the long run by consistent application of this very tax that has been suspended,” he said.
