Asymmetries of Power and Capacity: The Zambia Revenue Authority (ZRA) as an Instrument of Resource Nationalism, 1994–2021
2023; Taylor & Francis; Volume: 49; Issue: 3 Linguagem: Inglês
10.1080/03057070.2023.2270645
ISSN1465-3893
AutoresAlexander Caramento, Marja Hinfelaar, Caesar Cheelo,
Tópico(s)Mining and Resource Management
ResumoAbstractHeightened copper prices and the perceived profiteering of foreign mining investors in the 2000s spurred calls for greater revenue from mineral extraction in Zambia. Following the abrogation of the over-concessionary development agreements (DAs) in 2008 and the concomitant formation of the Mining Taxation Unit in the Large Taxpayer Office, the Zambia Revenue Authority (ZRA) has essentially functioned as an instrument of those resource nationalist demands. Building on the professionalisation of the regulatory body under the Mwanawasa administration, the ZRA became a formidable force in the policing of Zambia’s mining fiscal regime. In comparison to the rest of the country’s bureaucracy then, the ZRA functioned as what some scholars have termed a ‘pocket of effectiveness’ (POE). From 2006 until 2014, under the aegis of a ‘technocratic coalition’ made up of officials at the ZRA and Ministry of Finance, sympathetic politicians, and foreign technical advisers, the revenue authority was able to bolster its capacity to administer mining taxation. It is essential that the ZRA is not merely examined as an administrative institution outside of the political realm. This article’s contribution is that it examines the political factors that shape the ZRA’s emergence, performance and sustainability over time in relation to mining taxation. It demonstrates how the nature of Zambia’s political settlement, the structural power of the foreign mining investors and the weaknesses of other government ministries have encumbered the effectiveness of the ZRA as an instrument of resource nationalism. The article is based on interviews with a wide range of actors, quantitative and qualitative data and unreleased sources.Keywords: Zambia Revenue Authoritymining taxationresource nationalismpockets of effectivenesspolitical settlements Notes1 A. Chikwanda, ‘Ministerial Statement – Parliamentary Debates for the Fourth Session of the Eleventh Assembly’, National Assembly of Zambia, 26 February 2015, available at http://www.parliament.gov.zm/node/494, retrieved 28 January 2021.2 A. Fraser and J. Lungu, For Whom the Windfalls? Winners and Losers in the Privatisation of Zambia’s Copper Mines (Lusaka, Civil Society Trade Network of Zambia and Catholic Centre for Justice, Development and Peace, 2006); M. Curtis, Extracting Minerals, Extracting Wealth: How Zambia is Losing $3 Billion a Year from Corporate Tax Dodging (London, War on Want, 2015).3 For a broader discussion on Zambian resource nationalism, see A. Caramento, ‘“The curse of being born with a copper spoon in our mouths”: An Examination of the Changing Forms of Zambian Resource Nationalism’, in N. Andrews, A. Grant and J. Ovadia (eds), Natural Resource-Based Development in Africa: Panacea or Pandora’s Box? (Toronto, University of Toronto Press, 2022), pp. 173–99.4 J. Lungu, ‘Copper Mining Agreements in Zambia: Renegotiation or Law Reform?’, Review of African Political Economy, 35, 117 (2008), pp. 403–15; A. Simpasa, D. Hailu, S. Levine and R.J. Tibana, ‘Capturing Mineral Revenues in Zambia: Past Trends and Future Prospects’, United Nations Development Programme (UNDP) and EU–UN Global Partnership on Land, Natural Resources and Conflict, Discussion Paper (New York, UNDP EU–UN Global Partnership, 2013); D. Manley, ‘Ninth Time Lucky: Is Zambia’s Mining Tax the Best Approach to an Uncertain Future?’, Natural Resource Governance Institute (2017), available at https://resourcegovernance.org/publications/ninth-time-lucky-zambias-mining-tax-best-approach-uncertain-future, retrieved 28 January 2021.5 Interview with both a current member and a former member of the ZRA’s Mining Tax Unit, Lusaka, 14 October 2015.6 M. Roll, ‘Pockets of Effectiveness: Review and Analytical Framework’ in M. Roll (ed.), The Politics of Public Performance: Pockets of Effectiveness in Developing Countries (London, Routledge, 2014), p. 24.7 C. Cheelo and M. Hinfelaar, ‘Zambia Revenue Authority: Professional Performance Amidst Structural Constraints, 1994–2019’, ESID Working Paper No. 158 (Manchester, University of Manchester, 2020).8 S. Hickey, ‘The Politics of State Capacity and Development in Africa: Reframing and Researching ‘“Pockets of Effectiveness”’, ESID Working Paper No. 117 (Manchester, University of Manchester, 2019), p. 12.9 A. Bebbington, A.-G. Abdulai, D. Humphreys Bebbington, M. Hinfelaar and C. Sanborn, Governing Extractive Industries: Politics, Histories, Ideas (Oxford, Oxford University Press, 2018).10 M. Khan, ‘Political Settlements and the Governance of Growth-Enhancing Institutions: Draft Paper’, Research Paper Series on ‘Growth-Enhancing Governance’ (London, SOAS University of London, 2010).11 J. Di John and J. Putzel, ‘Political Settlements’, Governance and Social Development Research Centre (Birmingham, GSDRC, 2009), p. 4.12 Bebbington et al., ‘Conclusions: Interpreting the Politics of Natural Resource Extraction’, Governing Extractive Industries, p. 221.13 Cheelo and Hinfelaar, ‘Zambia Revenue Authority’, p. 26.14 O.-H. Fjeldstad and M. Moore, ‘Tax Reform and State-Building in a Globalised World’, in D. Brautigam, O. Fjeldstad and M. Moore (eds), Taxation and State Building in Developing Countries: Capacity and Consent (Cambridge, Cambridge University Press, 2008), p. 236.15 C. von Soest, ‘Donor Support for Tax Administration Reform in Africa: Experiences from Ghana, Tanzania, Uganda and Zambia’, German Development Institute Discussion Paper no. 2/2008 (Bonn, GDI, 2008), p. 26.16 C. Hill, ‘Tax Reform in Zambia’, in C. Hill and M. McPherson (eds), Promoting and Sustaining Economic Reform in Zambia (Cambridge, Harvard University Press, 2004), pp. 107–44.17 Fjeldstad and Moore, ‘Tax Reform and State-Building in a Globalised World’, p. 236; Hill, ‘Tax Reform in Zambia’, p. 116; M. Moore, W. Prichard and O.-H. Fjeldstad, Taxing Africa: Coercion, Reform and Development (London, Zed Books, 2018), p. 119.18 Hill, ‘Tax Reform in Zambia’, p. 109.19 Simpasa et al., ‘Capturing Mineral Revenues in Zambia’.20 A prominent example is the unwarranted five-year VAT and excise duty deferment awarded to Varun Beverages at the behest of former president Rupiah Banda in 2009. See Government of the Republic of Zambia, ‘Report of the Commission of Inquiry into the Operations of the Zambia Revenue Authority’ (unpublished confidential report, Lusaka, 2011), pp. 67–72.21 This ratio refers to actual VAT collections as the share of its potential base: IMF, ‘Zambia: Selected Issues’, IMF Country Report no. 17/328 (Washington, DC, IMF, 2017), p. 7.22 C. von Soest, ‘How Does Neopatrimonialism Affect the African State’s Revenues? The Case of Tax Collection in Zambia’, Journal of Modern African Studies, 45, 4 (2007), pp. 635–6.23 S. Nalishebo and F. Banda-Muleya, ‘Sales Tax Proposal: Are We Beating a Dead Horse? Preliminary Results from a Rapid Assessment’, Zambia Institute for Policy Analysis and Research, Working Paper no. 32 (June 2019).24 Moore et al., Taxing Africa, pp. 127–8.25 Interview with a former Minister who served in both President Levy Mwanawasa’s and President Rupiah Banda’s cabinets, Lusaka, 17 June 2015.26 The ‘first wave’ of Zambian resource nationalism entailed the nationalisation of the ownership, management and marketing of the large-scale copper mines from 1969 to 1975.27 In 2005, Zambia reached the HIPC Completion Point, whereby its debt stock was reduced from US$7.1 billion to US$4.5 billion. In 2006, under the Multilateral Debt Relief Initiative, the international financial institutions provided those countries that had already reached HIPC Completion Point with an additional debt write-off, reducing Zambia’s debt further, from US$4.5 billion to around US$600 million. A. Fraser, ‘Zambia: Back to the Future?’, in L. Whitfield (ed.), The Politics of Aid: African Strategies for Dealing with Donors (Oxford, Oxford University Press, 2008), p. 308.28 A.M. Kjær, O. Therkildsen, L. Buur and M.W. Hansen, ‘When “Pockets of Effectiveness” Matter Politically: Extractive Industry Regulation and Taxation in Uganda and Tanzania’, The Extractive Industries and Society, 8, 1 (2021), p. 296.29 Cheelo and Hinfelaar, ‘Zambia Revenue Authority’.30 ATAF, ‘African Tax Outlook 2019’ (Pretoria, ATAF Secretariat, 2019), p. 136.31 Moore et al., Taxing Africa, p. 121.32 Ibid., pp. 121–2.33 Von Soest, ‘Donor Support for Tax Administration Reform in Africa’, p. 28; von Soest, ‘How Does Neopatrimonialism Affect the African State’s Revenues?’, p. 632.34 C. von Soest, ‘Measuring the Capability to Raise Revenue: Process and Output Dimensions and their Application to the Zambia Revenue Authority’, Public Administration and Development, 27, 4 (2007), pp. 353–65.35 ‘Zambia Shuts Down Newspaper in Tax Dispute’, Reuters, 22 June 2016, available at https://www.reuters.com/article/us-zambia-media-idUSKCN0Z8297, retrieved 5 May 2021.36 Von Soest, ‘Donor Support for Tax Administration Reform in Africa’, pp. 27–8.37 Ibid., p. 30.38 Kjær et al., ‘When “Pockets of Effectiveness” Matter Politically’.39 Ibid.40 President Banda’s Finance Minister Situmbeko Musokotwane was more sympathetic to the foreign mining investors than his predecessor Ng’andu Magande, as the following section demonstrates. Hence, the coalition briefly lapsed under Musokotwane’s tenure in office. Minister Chikwanda was also sympathetic to the mines, but President Sata and many of his cabinet ministers, such as Guy Scott and Wynter Kabimba, were not.41 UK House of Commons, ‘International Development Committee – DFID’s Programme in Zambia’, Fifth Report of Session 2012–13, vol. 1 (London, House of Commons International Development Committee, 2012), p. 31.42 OECD Development Assistance Committee, ‘OECD Development Co-operation Peer Review: Norway 2013’ (Paris, Organisation for Economic Co-operation and Development, 2013), p. 68; interview with Tax for Development Programme Officer, Norwegian Embassy, Lusaka, 9 June 2015.43 Interview with Tax for Development Programme Officer, Norwegian Embassy, Lusaka, 9 June 2015.44 N.P. Magande, The Depth of My Footprints: From the Hills of Namaila to the Global Stage (Atlanta, Maleendo & Company, 2018), pp. 408–9.45 O. Lundstøl and J. Isaksen, ‘Zambia’s Mining Windfall Tax’, UNU-WIDER Working Paper no. 2018/51 (Helsinki, UNU-WIDER, 2018), p. 6.46 ‘ZCCM-IH Pays First Dividends in 14 Years’, Zambian Mining Magazine, 9, 59 (November/December 2014), p. 13.47 Lungu, ‘Copper Mining Agreements in Zambia’; Simpasa et al., ‘Capturing Mineral Revenues in Zambia’.48 Lundstøl and Isaksen, ‘Zambia’s Mining Windfall Tax’, p. 14.49 Interview with former Chief Executive Officer of Mopani Copper Mines, Kitwe, 6 October 2015.50 PriceWaterhouseCoopers, ‘Comparison of Mining Tax Regime in Zambia with Tax Regimes of Other Jurisdictions’ (unpublished report, Zambia Chamber of Mines, 24 September 2009).51 Lundstøl and Isaksen, ‘Zambia’s Mining Windfall Tax’, p. 21.52 Ibid., p. 7.53 Interview with both a current member and a former member of the ZRA’s Mining Tax Unit, Lusaka, 14 October 2015.54 Moore et al., Taxing Africa, p. 84.55 D. Kloeden, ‘Revenue Administration Reforms in Anglophone Africa Since the Early 1990s’, IMF Working Paper 11/162 (Washington, DC, IMF, 2011).56 Interview with both a current member and a former member of the ZRA’s Mining Tax Unit, Lusaka, 14 October 2015.57 O.-H. Fjeldstad and K.K. Heggstad, ‘The Tax Systems in Mozambique, Tanzania and Zambia: Capacity and Constraints’, CMI Report R 2011:3 (Bergen, Chr. Michelsen Institute, 2011), p. 43.58 O.-H. Fjeldstad and K.K. Heggstad, ‘Tax Administrations Working Together’, CMI Report 2012:3 (Bergen, Chr. Michelsen Institute, 2012), p. 8.59 Interview with both a current member and a former member of the ZRA’s Mining Tax Unit, Lusaka, 14 October 2015.60 Email correspondence with Arve Ofstad, former Norwegian ambassador to Zambia, 25 July 2016.61 ‘ZRA Engages Experts to Monitor Mineral Exports’, Zambian Mining Magazine, 8, 49 (May/June 2013), p. 15.62 ZRA, ‘Mineral Value Chain Monitoring Project Baseline Report’ (unpublished report, Lusaka, 2014).63 Interview with one of the co-authors of the MVCMP Baseline Report, Kalulushi, 7 July 2015.64 J. Wilson and A. England, ‘Barrick Suspends Zambian Output after Royalty Rise’, Financial Times, London, 18 December 2014, available at https://www.ft.com/content/ae503a76-86b6-11e4-8a51-00144feabdc0, retrieved 28 June 2023.65 Manley, ‘Ninth Time Lucky’, p. 6.66 B. Msiska, ‘Mineral Taxation in Zambia: Main Challenges for the Zambia Revenue Authority’, paper presented at the conference ‘Building the Domestic Revenue Base: Natural Resource Taxation and Tax Morale in Mozambique, Tanzania and Zambia’, 18–19 April 2012 (Cresta Golfview Hotel, Lusaka, Zambia).67 A. Readhead, ‘Transfer Pricing in the Extractive Sector in Zambia’, Briefing, Natural Resource Governance Institute, 5 July 2016, available at https://resourcegovernance.org/analysis-tools/publications/transfer-pricing-extractive-sector-zambia, retrieved 10 June 2022.68 G. Thornton and E. Pöyry, ‘Pilot Audit Report – Mopani Copper Mines PLC’ (unpublished report, submitted to ZRA Commissioner Domestic Taxes, 2010).69 Curtis, Extracting Minerals, Extracting Wealth, p. 18.70 ZRA, ‘Mineral Value Chain Monitoring Project Baseline Report’, p. 140.71 Ibid., p. 139.72 Msiska, ‘Mineral Taxation in Zambia’.73 Readhead, ‘Transfer Pricing in the Mining Sector in Zambia’, pp. 16–17.74 Interview with both a current member and a former member of the ZRA’s Mining Tax Unit, Lusaka, 14 October 2015.75 A. Readhead, ‘Special Rules for Commodity Sales: Zambia’s Use of the Sixth Method’, Natural Resource Governance Institute, 17 April 2017, available at https://resourcegovernance.org/analysis-tools/publications/special-rules-commodity-sales-zambia-use-sixth-method, retrieved 10 June 2022.76 Ibid.77 ZRA, ‘Mineral Value Chain Monitoring Project Baseline Report’, p. 140.78 Readhead, ‘Transfer Pricing in the Mining Sector in Zambia’, pp. 6–7.79 Msiska, ‘Mineral Taxation in Zambia’.80 Readhead, ‘Transfer Pricing in the Mining Sector in Zambia’, p. 13.81 Interview with both a current member and a former member of the ZRA’s Mining Tax Unit, Lusaka, 14 October 2015.82 Organisation for Economic Co-operation and Development (OECD), ‘Building Capacity to Prevent Profit Shifting by Large Companies in Zambia’ (Paris, OECD, 2020), available at https://www.oecd.org/tax/tax–global/building-capacity-to-prevent-profit-shifting-by-large-companies-in-zambia.pdf, retrieved 10 June 2022.83 Interview with Tax for Development (TfD) Programme Officer, Norwegian Embassy, Lusaka, 9 June 2015.84 ZRA, ‘Mineral Value Chain Monitoring Project Baseline Report’, p. 13.85 O. Saasa and S. Nalishebo, ‘Assessment of Mining Fiscal Regime in Zambia: 2000–2019’ (Lusaka, Premier Consult Ltd., 3 September 2019), p. 25.86 Interview with both a current member and a former member of the ZRA’s Mining Tax Unit, Lusaka, 14 October 2015.87 A. England and X. Rice, ‘Zambia Drops Exchange Regulations’, Financial Times, 22 March 2014, available at https://www.ft.com/content/17b5e90e-b0fa-11e3-bbd4-00144feab7de, retrieved 28 June 2023.88 Interview with both a current member and a former member of the ZRA’s Mining Tax Unit, Lusaka, 14 October 2015.89 J. Sikamo, ‘Presentation on the Impacts of VAT Rule 18(b)’, presented at Zambia Chamber of Mines Press Briefing (Moba Hotel, Kitwe, Zambia, 8 October 2014).90 Steven Mvula, ‘Thorny Rule 18 Revised’, Zambia Daily Mail, 27 February 2015, available at http://www.daily-mail.co.zm/thorny-rule-18-revised/, retrieved 23 June 2023.91 ZRA, ‘Zambia Revenue Authority Annual Report 2014’ (ZRA, Lusaka, 2015), p. 11.92 M. Ntanda and X. Manchishi, ‘Chamber of Mines Bemoans $600m VAT Non-Refund’, Times of Zambia, Ndola, 29 August 2014, available at https://www.times.co.zm/?p=32786, retrieved 28 June 2023.93 Cheelo and Hinfelaar, ‘Zambia Revenue Authority’, p. 23.94 Saasa and Nalishebo, ‘Assessment of Mining Fiscal Regime in Zambia’, p. 6.95 T. Siwale, ‘Rethinking VAT: Making Sense of Zambia’s Policy U-Turn on VAT’, ICG (blog) (London, International Growth Centre, 4 February 2019), available at https://www.theigc.org/blog/rethinking-vat-making-sense-of-zambias-policy-u-turn-on-vat/, retrieved 10 June 2022.96 ATAF, ‘African Tax Outlook 2018’ (Pretoria, ATAF Secretariat, 2018), pp. 94–6.97 Nalishebo and Banda-Muleya, ‘The Sales Tax Proposal – Are We Beating a Dead Horse?’98 Zambia Chamber of Mines (ZCM), ‘A Tax Too Far: The Economic Impact of Zambia’s Proposed Sales Tax’ (Lusaka, ZCM, 2019).99 Interview with a former Ministry of Finance senior official, Lusaka, 4 March 2020.100 C. Mfula, ‘Zambia Scraps Sales Tax Plan in Concession to Miners’, Reuters, 27 September 2019, available at https://www.reuters.com/article/us-zambia-economy-budget-idUSKBN1WC1H1, retrieved 10 June 2022.101 C. Mfula and H. Reid, ‘Indebted Zambia Pays $400 Million in VAT Refunds to Mining Firms’, Reuters, 13 January 2021, available at https://www.reuters.com/article/uk-zambia-debt-idUSKBN29I1BT, retrieved 10 June 2022.102 IMF, ‘Zambia: Selected Issues’, IMF Country Report no. 15/153 (June 2015), available at https://www.imf.org/external/pubs/ft/scr/2015/cr15153.pdf, retrieved 10 June 2022.103 T. Kelsall and S. Hickey, ‘What Is Political Settlements Analysis?’, ESID: Effective States and Inclusive Development (blog), Manchester, 14 September 2020, available at https://www.effective-states.org/what-is-political-settlements-analysis/, retrieved 10 June 2022.104 J. Muyanwa, ‘Govt Shelves 10% Mineral Duty’, Times of Zambia, 24 October 2013, available at https://allafrica.com/stories/201310241386.html, retrieved 28 June 2023.105 D. Zulu, ‘New SI Revoked’, Times of Zambia, 28 October 2013.106 S. Hickey, A.-G. Abdulai, A. Izama and G. Mohan, ‘Responding to the Commodity Boom with Varieties of Resource Nationalism: A Political Economy Explanation for the Different Routes Taken by Africa’s New Oil Producers’, The Extractive Industries and Society, 7, 4 (2020), pp. 1246–56.107 E. Mumba, ‘Msiska Notes Challenges in Implementing 2015 Mine Tax Regime’, Zambian Mining Magazine, 22 June 2015, available at http://www.miningnewszambia.com/msiska-notes-challenges-in-implementing-2015-mine-tax-regime/, retrieved 10 June 2022.108 Interview with senior ZRA official, Lusaka, 20 August 2015.109 Office of the Auditor-General, Report of the Auditor General on the Accounts of the Republic for the Financial Year Ended 31st December 2019 (Lusaka, Government of the Republic of Zambia, 2020), pp. 9–10.110 ATAF, ‘African Tax Outlook 2019’, pp. 164, 167.111 R. Mushota, ‘Mopani Ordered to Pay’, Times of Zambia, 29 December 2016; ‘Cheating Mopani Fined US $13 Million’, Daily Nation, Lusaka, 21 May 2020, available at https://www.pressreader.com/zambia/daily-nation-newspaper/20200521/281732681683437, retrieved 23 June 2023.112 Interview with both a current member and a former member of the ZRA’s Mining Tax Unit, Lusaka, 14 October 2015.113 Cheelo and Hinfelaar, ‘Zambia Revenue Authority’, p. 21.114 M. Funga, ‘How Suspended ZRA Employees Implicated their Boss in Smuggling Allegations’, News Diggers, 6 June 2019, available at https://diggers.news/local/2019/06/06/how-suspended-zra-employees-implicated-their-boss-in-smuggling-allegations/, retrieved 4 July 2023.115 M. Hinfelaar and J. Sichone, ‘The Challenge of Sustaining a Professional Civil Service Amidst Shifting Political Coalitions: The Case of the Ministry of Finance in Zambia, 1991–2018’, Pockets of Effectiveness Working Paper No. 6 (Manchester, University of Manchester, 2019).116 Norad, ‘2017 Norad Results Report’, p. 30.117 Interview with both a current member and a former member of the ZRA’s Mining Tax Unit, Lusaka, 14 October 2015; interview with Tax for Development (TfD) Programme Officer, Norwegian Embassy, Lusaka, 9 June 2015.118 T. Lines, Nordic Countries’ Support for Tax & Development (Oslo, Tax Justice Network Norway, 2019), p. 21.119 Ibid., pp. 20–2.120 Norad, ‘Norwegian Development Aid: Zambia Statistics’, available at https://resultater.norad.no/geography/africa/zambia?show=bistand, retrieved 10 June 2022.121 The MRT continued to be deductible up until 2019. Its deductibility was subsequently restored under President Hakainde Hichilema after the 2021 elections.122 ZRA, ‘Mineral Value Chain Monitoring Project Baseline Report’, pp. 15–19.123 Nalishebo and Banda-Muleya, ‘The Sales Tax Proposal – Are We Beating a Dead Horse?’124 Moore et al., Taxing Africa, p. 108.125 Interviews with Ministry of Mines personnel, Lusaka, 13 October 2015 and 19 October 2015; office of the Auditor General, ‘Report for the Financial Year Ended 31st December 2019’, pp. 46–7.126 M. Roll, ‘Comparative Analysis: Deciphering Pockets’, in M. Roll (ed.), The Politics of Public Performance: Pockets of Effectiveness in Developing Countries (Abingdon, Routledge, 2014), pp. 194–241.127 A finding recently corroborated by M. Jeppesen, ‘Semi-Successful? Semi-Autonomous Revenue Authorities in Sub-Saharan Africa’ (unpublished PhD thesis, University of Aarhus, 2022).Additional informationNotes on contributorsAlexander CaramentoAlexander Caramento Doctoral candidate, Department of Politics, York University, 4700 Keele St, Toronto, ON M3J 1P3, Canada. Email: alexcara@yorku.ca https://orcid.org/0009-0004-2513-6251Marja HinfelaarMarja Hinfelaar Director of Research and Programs, Southern African Institute for Policy and Research, 32A District Rd, Lusaka, Zambia. Email: marja.hinfelaar@saipar.org https://orcid.org/0000-0002-1928-757XCaesar CheeloCaesar Cheelo Associate Director and Research Fellow, Southern African Institute for Policy and Research, 32A District Rd, Lusaka, Zambia. Email: ccheelo@yahoo.com
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