Zimbabwe's Parliamentary Portfolio Committee on Transport and Infrastructure Development has tabled a proposal that could force mining houses to pay a ‘road rehabilitation’ levy that would be used to build and maintain roads in the areas where they operate.
Currently, the construction and maintenance of national highways and feeder roads are the responsibility of the Zimbabwe National Roads
Authority (Zinara), which sources its funding from the tolling of major highways.
However, chairperson of the Parliamentary committee Dexter Nduna said late last month that miners should pay for the rehabilitation
of the roads they used.
He said the road maintenance levy, which would help the cash-strapped Zinara to meet its project funding obligations, should be
incorporated into the new raft of mining taxes announced by Finance Minister Patrick Chinamasa in the 2017 Budget.
“Part of the mining tax should be directed towards a road rehabilitation fund from the mining houses and multinationals so that they can help resuscitate and reconstruct roads within the [areas where they operate] because they use them on a day to day basis to move the resources they are extracting from the mines,” he said.
Nduna said most of the roads linking major mines to towns and cities were in an advanced state of disrepair, while some were virtually impassable. He added that his committee would soon visit the Bubi rural district council, which had already introduced a road rehabilitation tax, to see how best it could be implemented.
When he presented the 2017 Bugdet, Chinamasa announced that government had contracted a Norwegian tariff and tax consultancy firm to introduce a new mining sector-specific taxation system that would significantly boost the country’s depleted coffers.
“Mining is one of the most opaque sectors in the country. So, we have been working with a Norwegian company since 2013 to come up with a
new mining taxation regime, and we hope the company will complete [the establishment of] the system by the
end of this year.”
He said that, currently, Zimbabwe was losing out on potential tax revenues, as it had neither the capacity nor the resources to monitor mining
However, players in the mining industry have warned that an additional tax burden could further constrain the mines, which have to contend with high operational costs and multiple taxes amid depressed product prices in the global commodities markets.
In terms of the existing mining taxation system, an estimated 60c out of every dollar earned by the miners is paid to government in taxes. Apart from the unit taxes paid to local authorities, miners in Zimbabwe are also required to pay environmental, radiation and revenue
Further changes that could affect the mining sector are expected when the Mines and Minerals Amendment Bill is signed into law later this year, as expected. Among its key proposals, the amended act seeks to make it illegal for mining houses listed on foreign stock exchanges to acquire mining rights in Zimbabwe.
It would also make it mandatory for any foreign investors with mining rights in the country to seek government approval before changing
shareholders or disposing of the rights.
The proposed legislation also seeks to make it mandatory for investors who are listed on foreign stock exchanges to invest up to 85% of the funds
raised in the acquisition of local mining titles in Zimbabwe. The penalty for violating the law would be a fine equivalent to the value of the funds raised through the acquisition of local shares.
Government would also have the authority to refuse to grant mining rights or titles to a public company, unless the majority of its shares are listed on a local securities exchange counter. The Minister of Mines will also be empowered to cancel mining rights and titles if there was proof that the holders falsified information to obtain them.