Suspend ‘choking’ taxes - Thinktank

GOVERNMENT should suspend all tax measures that have potential to stall the mining industry and institute a fiscal regime that will respond to the current prevailing challenges.

Policy Monitoring and Research Centre (PMRC) Executive Director, Bernadette Zulu, stressed that Government should adopt a fiscal regime that would respond to the prevailing Covid-19 and attract greater investment to spur a quick rebound. Ms Zulu said such regime would mitigate risks to disruption by instituting early warning mechanisms and implementing measures to protect industry cash flows. This, she explained, could be by deferring tax obligations, considering extension of deadlines and suspension of tax measures that had potential to stall mining and supply chain operations. “Government is further urged to ensure minimal disruptions to the supply chain especially critical supplies and consumables that keep the mining sector functional,” Ms Zulu said. She said Zambia’s mining industry in the context of Covid-19 was faced with many significant challenges, many of which had never be seen before. The prevailing conditions, she explained, had made it difficult for mining companies to dial up capacity while managing the risks of the pandemic in the wake of declining commodity prices. Ms Zulu said this drop in prices had affected operational margins for players in the industry with some being pushed into negative cash flows. The situation, she said, continued to be dynamic and called for rapid solutions and effective monitoring. She said Government must consider the immediate priorities and forecast the future of the mining industry and its evolution. “As easing of restrictions around the world is rolled out, Government is urged to prioritise and maintain safety and well-being of employees in the face of possible Covid-19 risks. “Timing of the sector’s recovery period is likely to vary across the globe and there’s need plan how this will affect operations and business processes with the possibility of restricted travel,” she said. Ms Zulu also observed the need for industry players to re-think strategies around commodity demand and pricing, work space layout, social distancing and response to future crises. She said given the economic impacts of the crisis, mining sector players were urged to prioritise local suppliers while establishing a fair balance with international suppliers.