THE Chamber of Mines of Zambia says uncertainty in the fiscal regime brought about by new mineral royalties as the final tax has unsettled mining companies, warning that about 12,000 jobs are on the line this year.
And Engineering Institution of Zambia vice-president for policy and public relations, George Sitali, says it is impossible to achieve national development without the involvement of engineers.
In his presentation on the current challenges in the mining industry and the impact on the Zambian economy during the 2015 Engineering Institution of Zambia annual general meeting yesterday, Chamber of Mines of Zambia president Jackson Sikamo said the mines are under pressure to increase production.
“This [new tax regime] will put further pressure on efforts aimed at increasing production and improving efficiencies to lower costs of production. It is imperative that this matter is resolved and replaced with a tax system that will increase revenue to the government coffers for social and economic development,” he said.
Sikamo said the 2015 mining tax regime will be very complex to administer, contrary to the perception that it was the simplest way of collecting taxes from the mines.
“It will be very complex as mines have open pit, underground and processing operations. Under the the existing fiscal tax regime, Zambia currently has one of the highest effective tax rate and high cost environments in the world,” he said.
Sikamo said the impact of the new tax regime will have tremendous long term consequences on the mining sector in Zambia.
“In terms of jobs, 12,000 jobs will be lost in 2015, 5,000 full time and 7,000 contractual. Losing these jobs will affect over 100,000 lives in Zambia. There is need to encourage investment in the mining sector for sustainability of the industry,” said Sikamo.
The mines have objected to the government’s implementation of a single tier tax regime, which has raised royalties to 20 per cent and eight per cent for open cast and underground operations, respectively, from the previous six per cent.
And Sitali said engineers are key to the development of the country.
“We have a challenge of providing solutions for the general welfare and improvement of this country. It is practically impossible for the country to develop without the full participation of engineers. We are key to the development of the country,” said Sitali.