Home » Industry » Case of the 15 Percent Export Tax On Unrefined Platinum

The Zimbabwe economic growth is evidently slowing faced with a plethora of challenges which are teaming against the efforts by the Government and private sector in turning around the economic fortunes of the country.

Understandably, when the Government is faced with a stagnating economy and stagnating revenues, the temptation to cause economic shocks by way of policy equally increases.

Like many other African countries, Zimbabwe is considered among countries that are highly endowed with mineral wealth, with the second largest known platinum deposits in the whole world, yet unemployment rates are high, people incomes are unsustainably low and poverty is on the rise.

Value chain economics suggests that, value addition and beneficiation of natural resources will improve the economic being of a country.

Export taxes have become a fashionable policy instrument to stimulate value addition and beneficiation. But are export taxes really effective? If they are, how best can they be applied?

In 2013, the Finance Minister, announced the introduction of a 15 percent export tax on unrefined platinum with effect from January 2015. Practically the minister was giving mining houses two years to build the refineries.

Reportedly, the mining houses engaged the Ministry of Finance for a deferment of the implementation to 2017. Resultantly, Minister Chinamasa announced the deferment in his 2015 national budget statement.

On the contrary, the 2015 Government finance bill, which was published on January 9 2015, does not provide for the deferment of the export tax to 2017. The bill instead proposes its introduction from the beginning of this year.

Notwithstanding the reasons behind, such a dramatic policy shift in a space of two months can be tantamount to destroying the investor confidence which the country is trying to rebuild following many years of disinvestment and political demonisation mainly by the West.

Investor confidence though intangible, if not given proper attention, can render futility the good efforts by both the public and private sector to attract fresh money into the economy.

The information at hand suggests that there is a communication challenge between the mining houses and the government which has resulted in the policy shift.

Though the government has stated in public media that the mining houses have not submitted concrete plans to build the refinery, hence the forthwith implementation of the export tax, the mining houses on the other hand are saying they have already begun the process of building a refinery to meet the Government expectations. These varying views are likely to create a stalemate that may not be beneficial to Zimbabwe.

Buy Zimbabwe,fully appreciates the Government’s interest to beneficiate our natural resources to create more jobs and value for our great country. This is certainly a critical policy path that could see the dawn of mineral based industrialisation in Africa.

However, how and when a good policy is implemented can be decisive in the efficacy of the policy.

The implications of the immediate implementation of the export tax are likely to be detrimental to the affected companies and the economy if the concerns by the miners are anything to go by.

This will compromise any expansion projects and also likely to cause a cut back on capital expenditure, retrenchments, company closures and add to confusion on our ability to attract foreign direct investment.

The net beneficiary of a Government policy should ultimately be the general Zimbabweans whose primary interests are jobs, improved incomes and better living standards.

In light of that, it is beneficial to Zimbabwe for both the Government and mining houses to put the economy and people of Zimbabwe first, before making decisions that are likely to jeopardise the envisaged gains from the otherwise, good policy intent.

Dialogue and engagement is key in unlocking solutions. It is only through dialogue that the parties can come to an amiable solution for the good of the country.

To that effect, Buy Zimbabwe is organising a retreat with the law makers, the responsible line ministries the miners and other stakeholders, to dialogue and create the economic case for shared policy formulation and implementation

We believe together we can make Zimbabwe great.

Source : The Herald