Forbes has reported that President Levy Mwanawasa of Zambia has announced the cancellation of all tax concessions for copper mining companies operating in Zambia, saying they were 'unfair and unbalanced' and that in their place 'The government has, therefore, decided to introduce a new fiscal and regulatory regime in order to bring about equitable distribution of the mineral wealth.'
The change is dramatic. Without them mining firms would have earned US$4 billion in the 2008/9 financial year but would only have paid tax of US$300 million. Revenue is expected to rise to US$650 million after the change.
Christian Aid has been campaigning on this issue for some time, and I contributed to that work. It's fantastic to see a result and a fairer sharing of the wealth from this resource.
Change is possible - and the courage to make that change possible is also welcome in this case.
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Hi Richard,
Thanks for this post. Just a quick clarification … I gather you mean “US$630 MILLION” rather than the “US$650 BILLION” indicated in the post above.
Vice
Vice
You’re right – million, not billion
Corrected now
And greetings!
Richard
One way in which the Zambian government could avoid a resulting and inappropriate strengthening of the kwacha and domestic inflationary pressures would be the setting up of a sovereign fund whose proceeds could be used to alleviate poverty and fund health and education, rather than suffering the driving down of agricultural exports as happened recently even under the old tax regime, with rises in mineral resources prices.
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I am tracking this development in detail via a blog on the website http://www.minewatchzambia.com
If you want detail on why Zambia is absolutely right to rip up the Development Agreements (and it’s not yet clear that’s what they are doing – the Finance Minister is probably on his feet offering more detail via the annual budget announcement as I type this) have a look at the original report ‘For Whom the Windfalls?’ also available on that site.