By Sukuoluhle Ndlovu
The Zimbabwe Coalition on Debt and Development (ZIMCODD) has called on government to revise tax incentives for the mining sector amid a Covid -19 pandemic that has affected economic growth.
In its Weekend Reader, ZIMCODD said the tax incentives were unnecessary as every cent should be saved. This follows a Public Finance Management Indaba that was hosted on the 3rd of February 2021 by ZIMCODD discussing the promulgation of Statutory Instrument (SI) 26 of 2021.
“The government must not freely give away its taxing right to a sector that bleeds the resources it needs to finance development. Tax incentives are mostly ineffective and weaken public financing for essential government services,” said ZIMCODD.
The utilization of mineral revenue has to be brought under democratic scrutiny.
“It is in the national and public interest for policy conversations and decisions around the mobilization allocation and utilization of mineral revenue to be brought under democratic scrutiny to reach public consensus. Zimbabwe’s mining sector is central to the achievement of the country’s socio-economic growth agenda and a vital channel for domestic resource mobilization.The mining sector alone is expected to contribute US$12billion annual export earnings by 2030 and a possible US$20billion plus by 2030, thus spinal to achieving middle- income status by 2030,” as said in the report.
Government has long been urged that the burden of taxes should be shared across all sectors, in particular, foreign owned mining interests and their stakeholders and not only burden presumptive taxes on informal sectors and 2% for small scale miners among others.
The government is being urged to increase parliamentary oversight on mining deals and tax incentives, open and transparent policy guidelines on tax exemption, the closure of loopholes and increased efforts to stem rampant tax avoidance and illicit Financial Flows (IFFs), the formulation of an Economic Empowerment Act to facilitate the equitable distribution of opportunities and benefits in the US$12 Billion Industry Vision to Zimbabwe and to open competitive buds.
This comes when Great Dyke Investments Private Limited, a platinum mine was granted a five year tax holiday or exemption on corporate income tax and the Indaba had to question if tax incentives to mining companies justified.
The UNECA report 2016 of the Hugh Level Panel on illicit Financial Flows out of Africa revealed that the mining sector is most vulnerable to IFFs due to poorly negotiated deals, transfer mis-pricing and under invoicing as well as over generous tax incentives. UNCTADD shows that US$40 billion in Africa is lost annually through IFFs
