LUSAKA (Reuters) – Zambia’s tax revenues will be hit badly in 2009 unless copper prices rebound, the country’s revenue authority (ZAR) was quoted as saying on Wednesday.
In April, the government introduced a windfall tax at 25 percent and profit variable tax at 15 percent above eight percent earnings, hoping to raise $415 million additional revenue in 2008 from the copper mines, but these efforts were dashed with plummeting copper prices.
ZAR’s Commissioner General Chriticles Mwansa told state media that tax collections in 2009 would be hit badly if the trend continues.
“Windfall tax completely falls off and profit tax will reduce because it is collected on profits. The only hope is pay as you earn (personal income tax). If the mines employ more people, then we can collect more (personal income) tax in 2009,” Mwansa told the state-run ZNBC radio.
The government also raised mineral royalty to 3 percent from 0.6 percent and corporate tax to 30 percent from 25 percent, but still could not reach its $415 million target.
Zambia’s cathode copper output rose marginally to 429,180 tonnes between January and October 2008 from 423,639 tonnes in the same period, the Bank of Zambia said, while exports during the period rose to 461,162 tonnes from 404,939 tonnes in 2007.
Copper mining is Zambia’s economic lifeblood and the copper mines are a major employer in this southern African country of 12 million people.
The central bank said that cobalt production declined to 3,659 tonnes for the 10 months to October from 4,044 tonnes in the same period of last year, which analysts attribute to the halting of operations at the country’s largest cobalt producer, Chambishi Metals Plc, in October.
Zambia exported 3,622 tonnes of cobalt during the review period compared with 3,941 tonnes in 2007, the data showed.
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