By Scoop Reporter
THE Centre for Trade Policy and Development (CTPD) has appealed to Government to craft and implement a fiscal policy that aims to incentivize artisanal and small-scale mining to grow the sector.
CTPD senior researcher in charge of extractives Webby Banda today said artisanal and small-scale mining continues to be a source of hope for many Zambians who cannot get jobs in the formal sector.
Mr. Banda says as a result, it is increasingly being seen as a game-changer of alienating poverty levels as the sector is mainly dominated by poor citizens because of several attributes including low capital expenditure, low barrier to entry, and high-income generation potential.
“CTPD has noted that the current fiscal policy in Zambia does not differentiate between large and small-scale mine operators. This places an excessively higher than the normal fiscal burden on the small-scale miners.
“CTPD further observes that the current tax regime as applied to artisanal and small-scale mining has the potential of taxing away a significant portion of production exploited by poor miners. This generates a vicious cycle of poverty in mining communities as the poor miners cannot retain and plough back profits to foster growth and continuity,” Mr. Banda said.
He says the current tax regime also has the potential of reversing the current formalisation process as most small-scale miners will shy away from getting mining rights and gold panning certificates in fear of the excessive-high tax burden.
He says this means they would rather remain in the informal sector where their hard-earned production will not be taxed away by the government.
“CTPD thinks that the recent spate of gold discoveries across the country provides yet another opportunity for the Government to focus their attention on devising a strategy that will maximize the benefit of the Zambian people from this sector.
“The Government in its strategy must therefore support the artisanal and small-scale gold miners by providing fiscal incentives through a sector specific tax regime. This must be done to recognise artisanal and small-scale miners as an important element in the gold value chain,” he said.
He says CTPD is of the view that the 40,000 Kilogrammes target of gold to be collected by ZCCM-IH cannot be attained if the sector is still in financial distress due to high tax rates.
“CTPD views artisanal and small-scale mining as potential tool of alienating poverty and promoting macroeconomic stability. To this extent, we recommend that Government should contemplate on implementing progressive production based mineral royalties pegged at lower rates.
“Government should consider reducing turnover or corporate income tax levied on artisanal and small-scale miners and should provide fiscal incentives to small-scale miners,” he said.