Formalisation to enable taxation of small-scale miners

Michael Magoronga, Midlands Correspondent
THERE is a need to urgently formalize the artisanal and small-scale mining (ASM) sector to create an environment that allows for the taxation of its players as well as facilitating their benefits from coordinated Government programmes.

This came under the spotlight during a Zimbabwe Miners Federation (ZMF) organised webinar for stakeholders, which was held under the topic: “Challenges involved in taxation of the ASM sector”.

The participants highlighted the importance of formalisation of the sector, which they said should play a key role to national economic development.

An estimated 40 000 ASM miners are believed to be formalised whilst about 1,5 million are said to be operating ‘illegally’ in Zimbabwe.

This is despite the fact that the small-scale mining sector is responsible of about 60 percent of gold deliveries to Fidelity Printers, contributing significantly to the country’s Gross Domestic Product.

Mining expert and University of Zimbabwe lecturer, Mr Motive Mungoni, said formalization of the ASM was beneficial to both the Government and the miners.

“Formalisation would not only improve the conditions of the sector on which millions of Africans have come to increasingly rely upon on their livelihoods but would also provide a platform for host governments to collect tax and other revenue, which the state is currently missing out on,” he said.

“An effective system of ASM taxation would be an appealing solution for both operators and the Government.

“Operators tend to mine informally because of the cost and bureaucracy involved but many would surely legalise as well as pay tax, if it meant gaining access to the wealth of the state and support schemes.”

The 2016 World Bank Doing Business Report observed that it takes 242 hours per year and 51 payments to comply with Zimbabwe’s tax laws and obligations and this resulted in high levels of noncompliance due to errors of omission and commission. The Government is reviewing these issues under its comprehensive ease of doing business drive.

“Facilitating the legalisation of the sector through the empowerment of its participants will require long term commitments from donors and policymakers to map its organisational structure, engage with its key operators and devise comprehensive policies, which accurately reflect the realities on the ground,” said Mr Mungoni.

Mr Mukasiri Sibanda of Stop the Bleeding Campaign, however, said ASM miners were already paying taxes through purchase of fuel and other mining equipment.

“There are a lot of consultative taxes that the artisanal miners are already encountering. For example, most miners are off the grid and rely on fuel for their operations of which fuel is one of the heavily taxed commodities in Zimbabwe. They should be acknowledged for that,” he said.

“Let’s look at ways of motivating the miners to play developmental roles like assisting in construction of infrastructure like clinics, roads and schools within their communities.”

Mr Sibanda urged the Government to create a conducive environment for the miners by providing equipment. Parliamentary Portfolio Committee on Mines and Mining Development chairperson, Edmond Mukaratigwa, said:

“We are pushing hard that the ASM sector be formalised, be given means of production and that they are recognised”.

Informality makes it hard if not impossible to trace ASM’s funds as well as bringing them to benefit from Government schemes as most banks demand collateral, he said.

The legislator hoped the Mines and Minerals Amendment Bill would tackle these issues, including facilitating comprehensive exploration and equipping miners before extraction.

Zimbabwe Revenue Authority (Zimra) revenue manager, Mrs Valentine Murumbi, said formalisation was a must.

“The small-scale miners and the small-scale businesses form the back-borne of the economy contributing over 50 percent national forex in the past decade,” she said.

“Business in the SMEs, therefore, needs to be formalised.”

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