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Tax revenue from Zambia’s copper-mining sector has undergone a 46 per cent leap, now totalling ZMK 35 billion (US$7.1 million) per month, as a result of the doubled mineral royalties that came into effect in April 2012
According to deputy minister of finance Miles Sampa, the financial boost is down to the government’s decision to opt for royalties on its mineral sector, rather than instigating a 25 per cent windfall tax.
Sampa explained, “The mineral royalty was definitely the better way to go, because as soon as the copper is exported the mines are taxed before any miner can even remove their costs, unlike the windfall tax which depends on profit.
“In terms of targeted revenues from the mines this year, we are within the budget and slightly exceeding.”
The Zambian government aborted a windfall tax in 2009 after copper prices slumped to US$2,900 per tonne as a result.
The royalties initiative, which has been pegged at six percent, will bring in the much needed revenue to aid in offsetting the country’s deficiencies, increasing expenditure on infrastructure projects, and boosting social spending.