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Are Zambia's Miners Paying More in Taxes than Mining Companies?

A podcast (Taxcast) by Tax Justice Network titled Zambian miners paying more tax than mining company has been posted online claiming that miners are paying more in income tax than mines are paying in corporation tax.

A Centre for Trade Policy and Development official, Saviour Mwambwa, claims that one mining company cost the Zambian government an equivalent of £50m in unpaid taxes over one period of time, more money than the British government gave the country in aid.

Map of Zambia showing the copper mining area in Zambia. Image released by Wikipedia user Acntx under Creative Commons (CC BY-SA 3.0).

Said Mwambwa in the podcast:

The company that we have been following alone, just one company, over a period of two years, we believe not less than £50m (US$80m) was lost by the government of Zambia by that company avoiding to pay taxes… That is more than the British government gave to Zambia in aid over the same period.

Mwambwa reasons:

Most countries including Zambia would not actually need aid if companies were paying the kind of taxes they ought to pay. So it is also in the best interest of European countries and European citizens to make sure that their governments are doing everything possible they can if Europe is serious about its rhetoric against corruption, they should fight things like tax avoidance.

An Action Aid official is quoted in the same podcast as saying:

These are mines owned by major multi-national companies. They are making large amounts of money for shareholders in Switzerland and UK. Because they are able to shift their profits out of Zambia and elsewhere before they get taxed, often benefiting from the secrecy of tax havens as they do it…

Earlier in the podcast, a mining expert and former Zambian government minister, Dr Mathias Mpande, said:

They economist say this [Zambia] is the 10th fastest growing economy but this is the poorest country after Niger… The social indicators in Zambia are very poor. We have to create enough capital which we can invest in public utilities and services. See the amount of wealth that Sweden and Norway have created out of mining? That is where we should be going.

Introducing the podcast, Tax Research UK writes:

Have you heard about the miners in Zambia who pay more tax than the multi-national mining company they work for?

How do these corporations get away with it? And how does it affect life for ordinary Zambians?

This is a special report from the Taxcast, the monthly 15 minute podcast from the Tax Justice Network.

The Tax Justice Network is an independent organisation launched in the British Houses of Parliament in 2003. Their coalition of researchers and activists support transparency and openness around tax issues in developing countries arguing that tax havens cause poverty:

The Tax Justice Network promotes transparency in international finance and opposes secrecy. We support a level playing field on tax and we oppose loopholes and distortions in tax and regulation, and the abuses that flow from them. We promote tax compliance and we oppose tax evasion, tax avoidance, and all the mechanisms that enable owners and controllers of wealth to escape their responsibilities to the societies on which they and their wealth depend. Tax havens, or secrecy jurisdictions as we prefer to call them, lie at the centre of our concerns, and we oppose them.

This podcast comes on the heels of a documentary Zambia: Good Copper, Bad Copper which appeared on YouTube early this year.

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