GOVERNMENT UNDER FIRE FOR BOWING TO MINING PRESSURE, SCRAPS EXPORT TAX ON GEMSTONES
The Zambian government is facing fierce criticism after suspending the 15% export tax on gemstones, a move that has been widely interpreted as bowing to pressure from multinational mining firms. The decision, made just two months after the tax was introduced, has reignited concerns about corporate influence over government policies.
Zambia, the world’s second-largest producer of emeralds, is home to Kagem Emerald Mine, which is majority-owned by London-based Gemfields Group. In December 2024, Kagem abruptly halted operations, citing an “oversupply” of gemstones in the global market. However, critics argue that the shutdown was a calculated move to pressure the government into reversing the new tax policy.
A month after suspending operations, Kagem escalated its opposition by announcing that it would cease selling precious metals, claiming that the 15% export tax, when combined with the existing 6% mineral royalty, created an excessive tax burden of 21%. The company warned that unless the government reversed course, it would be forced to lay off workers.
The government responded swiftly, suspending the tax and effectively aligning with Kagem’s demands. This has sparked outrage among opposition leaders, economists, and labor unions, who argue that the reversal undermines Zambia’s sovereignty and exposes the country to corporate blackmail.
Charles Chanda, leader of the United Prosperous and Peaceful Zambia (UPPZ), strongly condemned the government’s decision, accusing it of surrendering to foreign interests. “If we faced the same problem in 2019 and made the same mistake again, what does that say about our leaders? This is nothing short of economic manipulation by powerful corporations,” Chanda said.
He warned that allowing businesses to dictate tax policy sets a dangerous precedent. “If a company can simply suspend operations to get its way, what’s stopping others from using the same tactic? This government should have stood firm until the next budget cycle instead of rushing to accommodate foreign investors,” he added.
Economists have also voiced concerns, arguing that frequent reversals in tax policy create instability and weaken Zambia’s negotiating power. A senior economist from the Zambia Institute for Policy Research noted that the government’s swift retreat signaled weakness. “Every time a tax is introduced, mining firms protest, and the government backs down. This makes Zambia look like it has no control over its own economic policies,” he said.
Labor unions have echoed these frustrations, pointing out that the government’s decision does not guarantee job security. A Kagem Mine workers’ representative criticized the move, stating that “when operations were suspended in December, workers suffered. Now the tax is gone, but who’s to say they won’t shut down again when it benefits them?”
Despite mounting criticism, the government has defended its decision, with Finance Minister Situmbeko Musokotwane arguing that the suspension was necessary to protect jobs and encourage investment. However, the backlash suggests that many Zambians see this as yet another instance of foreign mining firms dictating national policy at the expense of the country’s long-term economic stability.
February 19, 2025
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