Review corporate tax for mining: Mashakada
According to Mashakada, the country’s fiscal space is very narrow and finance ministers have struggled with creating a wider leg room.
He said this has led to failure by the government to adequately finance recurrent and capital expenditures.
Mashakada said since the government intends to make mining the leading sector, its taxation must also reflect that.
Debating the Finance 2020 Bill, he said the government must leverage mining as the game changer in generating revenues.
“I wish the minister to consider reviewing significantly corporate tax in relation to mining so that it reflects its strategic scaling in the revenue sources and also want the Minister to review the royalties currently obtaining, even doubling them from their current level.
“I am appealing to the Minister to leverage mining as a game changer in generating enough revenues for our country.”
We need to harness more from mining
The Hatfield legislator said his heart bleeds when he thinks of minerals that are being exported in raw form.
He said the country is losing revenue from bi-products of exported raw minerals as well as potential jobs.
Mashakada said there is need to harness much more from the mining sector than the current levels.
“…let us avoid the natural resource curse and be able to harness mining as the driver of our economy and not reap pittance by way of revenue from the mining sector.
“That is very critical because where we are sitting we are not receiving enough as FDI. We are not accessing international loans as much as we can. Therefore, let us leverage our own natural resources.
“In my respectful view, mining has not been adequately taxed because there are a lot of mining houses making huge sums of money,” he said.
According to Mashakada, the economy must grow as proof that there are huge multinational companies that have invested in Zimbabwe.
You cannot have special corporate tax for mining alone
In his response, Minister Mthuli Ncube said while they are seized with the issue there was need to balance things.
“…We are seized with this issue of basically reviewing the mining sector fiscal regime. But I must say that we also have to balance things as we review. We are trying to promote this sector to become truly a US$12 billion sector.
“So we have to use tax incentives as well as other measures to make sure that it gets there. One of the things that we did, for example, was to make sure that royalties are tax deductible.
“In terms of corporate tax, again, we are of the same view that perhaps first of all you want a very simplified corporate tax structure.
“You cannot have a special corporate tax just for the mining sector- different from agriculture, industry and tourism. It just becomes untidy,” he said.
The Minister added that there is need for a simplified corporate tax structure and a strong private sector led economy.
He said “We cannot achieve that by keeping on raising corporate taxes in search for additional tax revenue.
“So while I understand where he is coming from in terms of broadening the tax base also, you can increase your tax revenue by stimulating growth so that you collect more revenue even from lower taxes,” he said.