THE Economics Association of Zambia says there may not be enough mining tax revenue collected by the government this year because the sector is grappling with low copper prices and production.
Copper prices on the international market have this year been steadily declining, now trading at around US$5,165 down from over US$6,200 in January this year.
EAZ president, Dr Chrispin Mphuka, said declining copper prices on the international market could see the government fail to collect sufficient mining tax revenues this year as evidenced by falling production levels.
“We have missed a chance! There was a time when copper prices were so high and government was being urged to start taxing them substantially because not as much money was coming from there and government was resisting for a long time,” he said in an interview.
“Now, they have seen the fiscal constraints, there is need for revenue, and expenditures are so high, but at this stage I think not much will be raised from the mines because we may be grappling with an issue of how do we keep the mines producing more when prices are lower. We hope the prices don’t keep sliding down but if that is the case, then it is really a bad picture for our country.”
Dr Mphuka said mining houses would continue to face operational challenges with lower copper production as a result of reduced power supply.
“They will have challenges; what we expect to be the key impact is a cut-down in production and that may have implications for employment because when firms are cutting down production, they may want to lay off workers,” he added.
And Dr Mphuka added that the statutory reserve ratios, adjusted last April to 18 per cent from 14 per cent, wre undermining economic growth as bank lending to different sectors of the economy remain constrained.
“We certainly can’t run away from the fact that it is impacting negatively on the ability of commercial bank lending. High reserve requirements are not good for investors and for development,” said Dr Mphuka, adding that the BoZ should revise the ratios downwards to levels that would allow for more liquidity on the financial market.
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