Maravi

Prof Saasa advises govt to move quickly on 'windfall tax' on mines

Prof Saasa advises govt to move quickly on 'windfall tax' on mines
By Fridah Zinyama
Tuesday May 15, 2007 [08:40]

A Lusaka-based economist, Professor Oliver Saasa has advised government to move quickly over the proposed introduction of 'windfall tax' on mining companies, as timing was critical. Commenting on continued calls for the introduction of windfall taxes on the profits arising from high global mineral prices, Prof Saasa commended the government over its efforts to re-negotiate the development agreements in order for the country to benefit from their resources.

He, however added that quick and decisive action had to be taken over the windfall taxes. Prof Saasa said it would be better to implement the 'windfall taxes' now whilst government was trying to resolve the legal issues in reviewing the current development agreement.

"Government has to be very quick and decisive in how it handles the 'windfall tax' as the windfall prices on the international market might not last for long," he said.

"A windfall tax can be simply defined as a one-off tax levied where some unexpected increase in profits or value is made which the government or the public think is an unreasonable advantage taken at the public's expense."

He said this means that precise action needs to be taken by the government over the issue of windfall tax that different stakeholders in the country have been calling for. "If a peak situation occurs there is need for quick response if one is to benefit from it," Prof Saasa said.

He explained that at the moment, prices on the international market were at their highest and mining companies were benefiting from this windfall but not the local people.

He said the suggestion to introduce a 'windfall tax' was meant to help the people of Zambia to benefit from “this short lived situation” that was currently happening. He said it was an opportunity that should be seized immediately and not be procrastinated over as there was no guarantee how long the high copper prices could last.

"This is why government has to move quickly and engage the mining companies about the windfall taxes as we are not assured about how long the good prices will last," Prof Saasa said.

He emphasised the need for the Zambian government to strike whilst the 'iron was still hot' in order for the people of Zambia to benefit from their resources.

Last week, finance and national planning deputy minister Jonas Shakafuswa said proposals for the introduction of windfall tax on mining companies was a good idea which the government could embrace.

Shakafuswa said implementation of windfall taxes would not be done in the short term since the government had already started re-negotiating new taxes proposed in this year's budget under the current development agreements for mining companies.

Discussions on windfall taxes have been sparked by a proposal made by Lusaka businessman and former chief executive of the defunct Meridian Biao Bank Andrew Sardanis.

Sardanis proposed that the government puts windfall taxes on mining companies in order to maximise benefits from high prices of copper on the international market.

Labels: JONAS SHAKAFUSWA, MINING CONTRACTS, OLIVER SAASA, WINDFALL TAX

posted by MrK @ 9:24 PM