Daily Mail, Zambia, December 28, 2011

The Consumer Unity & Trust Society (CUTS) International Zambia has urged Government to review incentives given to foreign firms to accrue increased revenue. The organisation has also said Government should consider increasing the mineral royalty tax to 10 percent, in line with other countries in the region. CUTS board chairman Love Mtesa observed that for a long time, Government has been giving ‘very’ generous incentives to foreign companies, hence the need to revisit them.

“In most cases these incentives have not translated into benefits for the country. It is vital to review such incentives which must not result in losing revenue required for development,” he said.

Mr Mtesa said this in Lusaka on Friday night at the meeting to review the year 2011 and 2012 expectations. He said the tax collection has been worsened by limited efforts by tax authorities to capture the informal sector.

Mr Mtesa said development agreements entered into with mining companies have compounded the already “not so good” situation.“Contentions that have characterised the agreements that were signed with the mines in the 90s could be the thing of the past if the statement by the Minister of Mines (Wilbur Simuusa) will be made to walk the talk,” he said.

He said there is need to bring future development agreements in the public media to promote transparency and accountability. On the mineral royalty tax, Mr Mtesa urged Government to hike it further like is the case with Botswana whose mineral royalty tax is at 10 percent.

“It is also understood that other countries have pegged it at higher than 10 percent while Australia is considering raising the mineral royalty tax to 30 percent,” he said. Mr Mtesa said the increase is essential because it will increase government revenue which should trigger economic growth in the country. Government proposed to increase the mineral royalty tax to six percent from three percent in the 2012 national budget.

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