By HELEN ZULU –

THE latest revision of the mining tax regime will help instil trust and confidence in the Zambian economy, the Bankers Association of Zambia (BAZ) has said. BAZ chief executive officer Leonard Mwanza said the tax changes which saw the taxing of mining profits at 30 per cent and 35 per cent and a uniform Mineral Royalty Tax at nine per cent would instil confidence between Government and the mining sector. Mr Mwanza welcomed the tax changes stating that the nine per cent mineral royalty tax would bring relief to the impasse, especially that this was preceded by addressing the Value Added Tax rule number 18, which had also caused a rift. On Monday, Government reverted to the 30 per cent corporate income tax on mining operations and pegged the mineral royalty tax for open cast and underground mining at nine per cent. “The reversal of the 2015 mineral tax brings relief to the mining tax impasse, especially that this immediately follows relaxed rules on VAT rule 18 and we hope this turns a new chapter and brings back trust and confidence between the Government and the Mining sector,” Mr Mwanza said. Mr Mwanza called for a balanced approach to resolving fiscal issues explaining that fiscal issues should be given an equal weighting in addressing economic challenges as opposed to reliance on monetary policies alone to ensure economic fundamentals were evenly balanced. “As a sector our view is that fiscal issues must be given an equal weighting in addressing economic challenges as opposed to reliance on monetary policies alone to ensure economic fundamentals were evenly balanced in the market,” he said. BAZ urged the mining companies to unlock their investment muscle as the contentious issues regarding taxation had now been addressed. Mr Mwanza has also expressed concern over the increase in the Statutory Reserve Ratio by four per cent which could lead to reduced liquidity on the market. He said this had started playing out with the under subscription of last week’s Treasury Bills. “Right now institutional deposits are fetching as high as 22 per cent on the market against a cap on lending of 24.5 per cent. The effect of this is that bank’s margins are seriously squeezed and creating new lines of credit becomes unattractive option for banks,” he said. “Unless interest rates are raised to reflect the cost of funds on the market this may pose a serious challenge to financial growth sectors particularly the Micro and Small medium enterprises”.