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The Centre for Trade Policy and Policy Development (CTPD) has urged government to make bold decisions in the 2024 national budget that will revive the mining industry.
The centre is worried that the low productivity in the sector had affected tax revenue collection from the sector.
CTPD, in a statement issued on Thursday, showed concern about the slow response of the mining sector to the tax incentives it was accorded in the 2022 and 2023 national budgets.
Elijah Mumba, Lead Researcher (Extractives) at CTPD expressed concern that as at the first quarter of 2023, the mining sector witnessed a 24.37 percent drop in copper output, recording 143,640 meteic tonne compared to 189,953 metric tonne in the same 2022 period.
“Despite favourable tax adjustments for the sector in 2022 and 2023 budgets – including reducing Company Income Tax (CIT) from 35 percent to 30 percent and allowing mineral royalty deductions for CIT calculations, results have not been good enough.
“Low production trends persist, alongside unmet mining tax revenue,” Mumba said.
Read more: Zambia’s current mining policies misguided, claims ex-Commerce Minister, Sichinga
He regretted that the output for the first quarter of this year fell below the average quarterly production from 2010 to 2022 by 25.9 percent.
He said such a steep drop in copper production was indeed a cause for concern, especially considering the ambitious goal set by the government to attain an annual copper production of 3 million metric tonnes within the next nine years.
Mumba, therefore, proposed some strategic measures to be carried out as Zambia looked forward to the 2024 national budget.
He proposed increased funding to the Geological Survey Department (GSD) to encourage crafting of long-term sound decisions in the mining sector.
Mumba said this would also encourage long term investment.
The other proposal made was the need to deal with Value Added Tax (VAT) refund claims which he pointed out to predominantly arise from claims withing the mining sector.
“There is a need to analyse what the drivers of VAT refund claims are to ascertain whether they are in fact genuine. Also enhancing compliance checks will help combat fraudulent claims,” Mumba said.
He also stressed the need to encourage local value addition within the mining sector as well as promoting capacity building and skills development in the industry.
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