Mineral revenue transparency is a key ingredient for good mineral resource governance which is critical to transform mineral wealth into better living standards for all. Transparency features prominently in the Africa Mining Vision (AMV) which envisages “transparent, equitable and optimal exploitation of (Africa’s) mineral resources to underpin broad-based sustainable growth and socio-economic development.”
Generally, the mining sector is known for secrecy, corruption and swindling of national benefits from the extraction of mineral resources. In Zimbabwe, for instance, the president in March this year opined that the nation lost US$15 billion from the foggy diamond mining operations in Marange. Citizens, mostly, are starved of much needed information to hold to account government and mining companies on management and utilisation of mineral resources. Hence the opportunity presented by mineral wealth is squandered in most instance.
Zimbabwe is lagging behind its mineral rich peers like Zambia and Ghana who have adopted the global best practice on mineral revenue disclosure. That is the Extractive Industry Transparency Initiative (EITI). The home grown version of EITI, the Zimbabwe Mineral Revenue Transparency Initiative (ZMRTI) has failed to take off since its formation in 2011.
That aside, institutions central to mineral revenue disclosure such as the Zimbabwe Revenue Authority (ZIMRA) have a key role to play in providing information to the public. Consistently, ZIMRA publicly release reports on aggregate tax revenue per tax head quarterly and annually. From ZIMRA’s reports, it is easy to glean the tax revenue performance of each tax head. For instance, Corporate Income Tax (CIT), Pay As You Earn (PAYE), Value Added Tax (VAT), Custom Duty, Royalties and Withholding Tax.
As a result, royalty income the only distinct mineral revenue stream can be tracked from ZIMRA’s revenue performance reports. Other tax heads are a common feature to all economic sectors, agriculture, manufacturing, tourism and finance including mining. As a result, citizens have remained in the dark regarding the performance of mining tax revenue. Tax is an important source of revenue for government which is critical to the financing of social services needed to reduce inequality and deliver better living standards for all citizens.
However, ZMIRA can help to shed more light by additionally disclosing the tax revenue performance of the mining sector per each tax head in its quarterly and annual reports. This is in line with the consistent calls by mining impacted communities and CSOs mainly through the Zimbabwe Alternative Mining Indabas (ZAMIs) held annually since 2012 to date.
Notably, the Publish What You Pay (PWYP) international campaign which has been embraced by CSOs in Zimbabwe calls for governments to disclose revenue received from the mining sector. Further, PWYP campaign calls for mining companies to publish the payments made to various government arms, to publish why they pay. Meaning the disclosure of tax agreements and to publish how they extract, which is related to protection of community rights, environmental, economic, social and cultural impact.
Disclosure of the performance of the mining sector per each tax revenue head by ZIMRA is an important stepping stone towards the disclosure of disaggregated tax revenue receipts per each mining company and where feasible, per each mining project. Thus the secrecy laws which prohibit ZIMRA to publicly release tax payments made by each mining company must be abolished to fulfill the constitutional aspiration of public access to information on management of public resources.
Minerals are finite pubic assets. The public, therefore, must have access to information on how they are benefiting from the exploitation of their minerals resources. Citizens and CSOs, in turn, can scrutinise if the nation is getting a fair share from the extraction of minerals. Bad deals, particularly, harmful tax incentives are one of the main challenges prejudicing the tax revenue flows to government. In 2015, the Zimbabwe Platinum Mines (Zimplats) was refunded roughly US$100 million as overpaid royalties. This was necessitated by the court judgement which confirmed the legality of the 25 year, 2.5% royalty stabilisation agreement of 1994 which undermines the rates pegged through the Public Financial Management Act. Currently, platinum royalty rates are being charged at 10% and Zimplats is only 2.5%.
In addition, the impact of aggressive corporate tax planning and tax evasion can be deduced if taxation systems are transparent. Given access to information which is timely, credible and useful for decision making, citizens and CSOs can pressure government and mining companies on negotiating good deals and on curbing Illicit Financial Flows.
Much has been said about the potential of Zimbabwe’s mineral wealth to contribute to better quality of life for its majority poor citizens. National budget statements from 2010-2016 have lamented opacity of the mining sector and that the nation is not getting its fair share of mineral wealth.
Institutions such as ZIMRA must do more to end the secrecy in the mining sector by publicly disclosing mining tax contribution per each revenue head, mining tax contribution made by each company and per mining project where necessary as well as the cost of tax incentives.
In line with international best practice on open data, ZIMRA can furnish information not only on PDF but on formats such as excel to allow users greater opportunities to freely use the data anyway they deem fit.