STOP BLACKMAIL

THE dissention between Government and the mining firms over new taxes has the potential to hurt the economy at the time the country is set on a stabilisation and growth path. Therefore, the two parties must quickly get to the round-table and resolve the matter as opposed to debating the matter in a manner that is exacerbating the disagreement. Clearly, this is no time for serious disagreements with major players in the economy, but it is time for the country to consolidate fiscal policies. The country should this time around work towards reducing shocks in the economy so that the Economic Stabilisation and Growth Programme (ESGP) and other Government initiatives are not scuttled in the process. Yes, the government has worked out a programme to enhance domestic revenue mobilisation through tax and non-tax measures. The emphasis though is enhancing revenue collection through taxes – a practice in all countries. It is against this background that the government has introduced new tax measures in the extractive industry. Thus mining firms must not look at the new tax measures using distorted eye lenses. The mining firms’ counterproposal is laced with a toxic dose which has sparked a debate. Surely, scaling down production and holding back investment is the quickest route to liquidation or simply shutting down an undertaking. In essence, a scale down in production and suspension of re-investment is a preparation or pointer to closure. Is the Zambia Chamber of Mines suggesting that mining firms are folding up! If the answer is in the negative, then the only inference is that the firms have merely unleashed an unwarranted threat to force Government to back down. Mining firms are doing so knowing too well that the country is trying as much as possible to avoid a precarious scenario in the economic arena . For instance, they are aware that the country cannot meet economic fundamentals and targets if unemployment levels go up. That it is why they are threatening to throw thousands of miners on the streets. Under normal circumstances, mining firms should have come up with a feasible and reasonable counterproposal in terms of figures. They should have called for a reduction in the proposed figures so that there is a win-win situation rather than demanding complete withdrawal of taxes. Yes, Government has introduced five percent import duty on copper concentrate and also proposed mineral royal tax in graduating bands. Additionaly, the state has introduced a 15 percent duty on emeralds and gold exports. It would have been reasonable for mining companies to counter-propose that import duty should stand at two per cent, for instance, instead of the proposed five per cent. They should engage Government with due decorum and not attempting to call the shots through the media. In fact, it is erroneous for Konkola Copper Mines (KCM) officials to suggest that they are closing the Nchanga unit because of the new tax proposals. KCM has been struggling for a long time and scaled down operations way back; it has been failing to meet obligations with contractors and suppliers. Most of the mining equipment, vehicles and other facilities have broken down as a result of lack of maintenance. Therefore, KCM should not even have jumped on the bandwagon because the firm has been in a mess to the extent of struggling to pay salaries. Therefore, mining firms should stop demonising Government over taxes, but negotiate reasonably for a win-win situation.