MINERAL-RICH countries in Africa have been advised to ensure a balance between promoting investments and a fair tax framework that benefits both the industry and nationals of their various countries.
Zambia’s Minister for Finance and National Planning, Mr Situmbeko Musokotwane, appealed to governments and revenue collection agencies to “recognize the importance of striking a delicate balance between promoting investments and ensuring a fair and equitable taxation framework that benefits both the industry and the societies where mineral resources are found.”
“As we embark on this enriching journey of exploration and discovery, let us keep in mind the importance of striking a balance between economic prosperity and environmental sustainability. Let us embrace the principles of responsible mining, where the welfare of communities, protection of ecosystems, and respect for human rights are at the forefront of our endeavours” he stressed.
The Minister was delivering the keynote address at the opening session of the global conference on the Future of Resource Taxation at the Mulungushi International Conference Centre in Lusaka.
The three-day conference , organised in partnership with the Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development (IGF) and the African Tax Administration Forum (ATAF) looked at how governments can improve revenue collection in the mining sector, what the evolving international tax landscape means for the mining sector and accelerating a low carbon transition through taxation
Over 300 officials from government ministries responsible for mining and finance, officials from revenue authorities, and leaders of industry, civil society, academia, and international organizations gathered for purposes of discussing the role of taxation in an era of energy transition and other global trends in resource taxation.
Finance and Planning Minister Musokotwane reckoned that balancing the need for attracting investment while ensuring a fair share of benefits for the country could be challenging, leading to intricate tax frameworks and called for careful, meticulous
He said the Zambian government was focused on promoting sustainable mining practices, attracting further investments, and ensuring the industry’s benefits are shared equitably among the population.
The Finance Minister acknowledged that “mining is highly dependent on global commodity prices, which can be subject to significant fluctuations and fluctuating prices make it challenging for governments to establish stable tax regimes and predict revenues accurately.
He called for harmonious frameworks and fiscal regimes that foster investment, enhance transparency, and ensure a just distribution of benefits.
‘The balance has not been right’
In an interview with this paper, Tax Justice Lead at Oxfam International, Christian Hallum, could not agree more with the Zambian Minister on the need for a balance in investments with a fair tax regime.
According to him, “for too many years, the balance has not been right: there has been too much emphasis on attracting investments at the expense of social investment, with the idea that if we give tax incentives, then we can attract more investments.”
Mr Hallum observed that the undue focus on tax incentives, in the name of promoting investments, were at the expense of social investment. According to him, studies had shown over the years that the benefits had not trickled in, from the tax incentive approach.
“We need to see a new balance; a new balance in favour of social investment, raising revenue from the mining sector and investing it in people and climate which will in long term help the investment climate
The mining sector is at a nexus of important global phenomena: the impact of climate change and the push to green the world economy, the development of new technologies affecting labour markets, and global momentum against inequalities and in favour of tax reforms are trends that are raising the importance of mining both for its mineral and financial outputs.
In this context, the IGF has maintained that governments will need new and innovative fiscal measures to protect the public’s financial interests during the next generation of resource extraction.