Lusaka (AFP) – A leading contender in Zambia’s presidential elections, Hakainde Hichilema, on Sunday vowed to review a new ‘penal’ mining tax regime that has spooked investors in the copper-rich nation.
Zambia tripled mining royalties to 20 percent from six percent on January 1, putting the government at loggerheads with mining firms already buckling under a fall in global commodity prices.
Hichilema, a wealthy businessman and leader of the United Party for National Development (UPND), is seen as a frontrunner in elections on Tuesday, along with the ruling Patriotic Front candidate Edgar Lungu.
Hichilema says he will build an investor-friendly Zambia and review the “terrible, penal” tax if elected to succeed former president Michael Sata, who died in October. “Anything that damages industry, that damages growth, we will deal with that,” the British-educated economist told AFP in an interview.
“One aspect (that is) unacceptable is the introduction of the mineral royalty at 20 percent, which is basically a turnover tax, it does not recognise the cost of production,” he said.
In a sign of the fallout from the new tax regime, Canadian firm Barrick Gold announced last month it was suspending operations at its Lumwana copper mine, and would start laying off workers in March.
“How can any knowledgeable government in today’s world impose a tax like that?” Hichilema asked.
Mining companies had an obligation to pay tax, “but if you tax them to a point of death, then you don’t know what you are doing,” he said
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