Zambia’s copper exports are not being properly accounted for because major exporters are exploiting a vicious circle of corruption to avoid paying tax, said the country’s main opposition leader.
Michael Sata, who will be running against President Rupiah Banda in polls later this year, told Reuters he did not believe the export copper data released by the country’s central bank.
Sata, the president of the Patriotic Front party who narrowly lost a disputed 2008 poll, said as taxes were not collected, copper exports were not being properly accounted for, Reuters reports.
“If you don’t tax anything, where do you get your statistics from? If you don’t tax them, you don’t have any interest in where they are sending their copper,” he told Reuters in an interview in his modest and cramped office in downtown Lusaka.
He said the export and production data released by the mines themselves were “for public relations, not for tax revenue”.
Zambia is Africa’s top copper producer but while the commodity accounts for 70 percent of its export earnings it only provides about one percent or so of its tax revenue.
Zambia’s mine taxes include a 15 percent profit variable tax, 25 percent corporate tax and a 3 percent mineral royalty. But NGOs and other campaigners have said miners have used creative accounting or inflated their costs to pay less.
Sata was short on specifics on how he would remedy the situation but said he would root out graft and make the companies “transparent and answerable to the government”.
He said he would boost the country’s thin revenue base by getting miners to pay what they owe under existing rules and accurately recording exports rather than raising taxes.
He made a policy u-turn last year on the revenue issue, saying he no longer supported higher mine taxes
HOT ISSUE, WORKING-CLASS APPEAL
But getting mines to pay what they owe is a different issue and is currently a hot one that could appeal to the Patriotic Front’s urban base on the country’s Copperbelt.
Zambia has asked commodity trader Glencore’s Mopani Copper Mines for unpaid taxes after an audit of the subsidiary, leaked earlier this year, said it had underpaid mining dues, the country’s finance minister said.
President Banda told Reuters earlier this year an audit of three mines should enable the government to recover more than $200 million in unpaid dues
Sata has also in the past accused Chinese companies, which are hungry for Zambia’s resources, of being exploitative and creating “slave conditions”.
China-bashing appeals to Sata’s urban working-class base but he said a non-corrupt government would make the Chinese “behave” and their investments would be welcome.
“It is the corruption which leads the Chinese to behave with impunity. If there was no corruption the Chinese would respect our laws, would respect our people, would respect our country.”