The Zambia Youths in the Fight Against Corruption (ZYAFAC) says the recent threats by mines to downsize labor shows that most mining firms in developing countries and Zambia in particular have proved to be extremely exploitative.
ZYAFAC Executive Director Maurice Malambo says his organization does not see anything wrong with the new mining and taxation policy to be implemented in the 2019 fiscal year and beyond.
Mr. Malambo says his organization is further disappointed by the antagonistic reaction of some mining firms in Zambia regards the changes made to the tax formula policy.
“The threats to downsize the labor force is reflective of the fact that the mining conglomerates are used to short changing developing countries, the Zambian people in particular in respect to tax revenue because it is not the first time they are arm twisting government with the threats of laying off some worker or downsizing the work force under the guise of cutting down on expenditure in keeping their investments afloat,” he said.
Mr. Malambo states that the new mine tax policy, which in principle is a form of Windfall Tax, will ensure that the Zambian economy and people do not just benefit from corporate and mineral royalty taxes, but also benefit from the profits at a predetermined threshold.
He says this kind of tax policy is a norm in advanced economies such as Australia and others to which all mining firms are compliant.
“Regards, the reversion from the general tax formula policy under the Value Added Tax (VAT) arrangement to Sales Tax, as an organization we strongly hold the view that sales tax if well managed is an efficient form of taxation and beneficial to both the revenue department, the Zambia Revenue Authority and the tax payers in the sense that the collection of tax on the part of the revenue department constitutes a cost and so does the remittance of tax on the part of the tax payer. In practice, there is an additional cost to both the revenue department and the tax payer in respect to tax refunds,” said Mr. Malambo.
“A good tax policy must as much as possible be easy to implement and reduce the cost of implementation on the part of the collector (revenue department) and the remitter.”
He further adds that this defies economic logic of the most basic, a scenario in which a revenue strapped developing economy like Zambia would sustain a tax formula policy in which the component of tax refunds potentially constitutes a form of revenue or income to the tax payer. Suffice to mention that Zambia is not the only country that has reverted from the Value Added Tax formula policy to Sales Tax, Canada is among others.
“Lastly, we have taken note of the six months transition period allotted, we therefore urge the government and the relevant stakeholders to continue engaging order to put in place comprehensive modalities to effect a noninverse implementation of Sale Tax formula policy by addressing foreseeable or evident setbacks such as the possibility of compound taxation or the repetition of tax, which can potentially lead to an increase in the cost of certain goods and services, commodity price driven inflation and others,” said Mr. Malambo.
The ZYAFAC Executive Director further states that the six months transition period should therefore be used to deal with such foreseeable or voidable setbacks, and crafting a comprehensive schedule of goods and services to be exempted of tax and at what stage (s) of production should the defined tax exemption be effected.
“We furthermore strongly urge the government not to succumb to the arm twisting tactics by some members of the business community, mining firms in particularly. By the same token, implore the Zambian citizenry, political parties and civil society to stand untied on such national cause of common interest and benefit,” he said.

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