Zambia’s chamber of mines defends new price-based mineral tax (Reuters Africa – May 18, 2016)

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LUSAKA (Reuters) – Zambia’s new price-based mineral royalty tax will enhance the collection of government revenue rather than compromise it, the Chamber of Mines said on Tuesday, defending the new levy after recent criticism.

The chamber’s president Nathan Chishimba was reacting to a statement by civil society organisations advising against the new tax regime on the grounds it was investor-led and would not maximise revenue in times of commodity price booms.

“One cannot separate mining tax revenue from mining investment, because it is the mining investment which ultimately produces the tax revenue,” Chishimba said in a statement. Zambia’s amended mines bill proposes to reduce copper royalties to a variable tax of 4 to 6 percent, depending on the price of the metal.

The royalty tax would be 4 percent when the price of copper is below $4,500 a tonne, 5 percent between $4,500 and $6,000 and 6 percent above $6,000.

“The largest amount of tax revenue is always generated over the longer term, and this can only happen if mining companies are incentivised to invest over the longer term,” he said.

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