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ActionAid concerned with President Lungu’s directive to effect changes by April 8th to new mining tax regime

ActionAid Zambia is concerned by President Edgar Lungu’s directive to the Minister of Finance and the Minister of Mines to effect changes to the Current Mining Fiscal Regime by 8th April 2015.

Firstly we appreciate the urgency with which the president wants to resolve the impasse in the mining sector and as ActionAid we welcome his earlier directive to the ZRA to engage in dialogue with the mining companies over the VAT refunds and with the Ministry of Finance on the new mining tax regime 
 
We are, however, greatly concerned that this directive from the president comes in the wake of receiving submissions from individual mining companies and from the chamber of mines. The President has since proceeded to issue another directive to effect changes without any feedback from the relevant ministries on his earlier directive. 
 
The president has further gone on to prescribe the measures to be undertaken, which task should have been left to the relevant technical government agencies. Below are the directives issued by the president:
 
  • Maintain status quo but negotiate interim fiscal arrangements for operations that are most affected
  • on a case-by-case basis;
  • Identifying potential legal or regulatory modifications to the existing
  • 2015 fiscal regime that could be readily passed and implemented;
  • Defer implementation of the 2015 fiscal regime, and
  • Temporary reinstate the 2014 fiscal regime as a more amicable regime is negotiated.
 
It is difficult to understand on what basis the President is issuing this directive. We believe this directive not only undermines the autonomy of the relevant government agencies (Ministry of Finance, Ministry of Mines & Zambia Revenue Authority) to effectively carry out their duties but is yet another illustration of current government’s inconsistent economic and fiscal policy management. We also dare to add that such directives can only breed mistrust between the people of Zambia, Mining industry and those tasked to look after the affairs of the nation.
 
As ActionAid we reiterate our call for transparency and accountability in the matter, and that the current situation presents an opportunity through genuine dialogue to develop a robust mining fiscal regime that will result in a win-win situation for the people of Zambia and the mining companies. This will not only solve the challenge of policy inconsistency that has gripped the sector but also lead to increased revenue collection and boost investor 
confidence.
 
President Edgar Lungu knows very well that Zambia, according to the Mbeki Report on illicit financial flows, is one of the countries with the highest levels of illicit outflows in Africa. To deal with this calls for serious leadership and the President has the responsibility to demonstrate this given his various pronouncements on the issue. This is a matter that cannot be resolved by unresearched Presidential directives. The President endorsed the commitments of the report at the AU Heads of State Summit and it’s our hope that this commitment will be demonstrated through implementation of the recommendations and not just a ceremonial gesture.
 
It is essential that all companies operating in Zambia pay their fair share of taxes, which has the power to help us build a better future. Tax has the power to build schools and educate our children; the power to build roads and allow goods to travel; to provide medicines for better healthcare; the power to provide vital public services. Tax Power can help us to realise our potential. .
 
Pamela Chisanga, Country Director
 
Ends
 
For further information contact Kryticous Patrick Nshindano, +260 966 629122, kryticous.nshindano@actionaid.org