WIDER Working Paper 2018/51 Zambia’s mining windfall tax Olav Lundstøl1 and Jan Isaksen2 May 2018 Abstract: In 2008, the Government of Zambia reformed its mining tax regime for large-scale copper mines through a unilateral legislative change. The country went from having one of the lowest average effective tax rates and government take to be above the average. We focus on a particularly controversial element of the packet of changes: the windfall tax. We trace adjustments in the mining tax regimes since independence and calculate effective tax rates and the fiscal sharing between government and companies. Empirical evidence shows the 2008 mining tax regime as being both understandable and justifiable from an economic point of view, considering the nature of the state and the copper companies. Keywords: Zambia, mining, windfall tax, fiscal benefit sharing JEL classification: Q00, Q01, Q28, Q32, Q38 Acknowledgements: We thank Tony Addison and Alan Roe for comments and suggestions. 1 PhD Candidate, African Tax Institute- Department of Economics, University of Pretoria, South Africa, corresponding author:
[email protected]; 2 Emeritus Researcher, Chr. Michelsen Institute (CMI), Bergen, Norway. This study has been prepared within the UNU-WIDER project on 'Extractives for development (E4D)’, which is part of a larger research project on ‘Macro-economic management (M-EM)’. Copyright © UNU-WIDER 2018 Information and requests:
[email protected] ISSN 1798-7237 ISBN 978-92-9256-493-3 https://doi.org/10.35188/UNU-WIDER/2018/493-3 Typescript prepared by Lesley Ellen. The United Nations University World Institute for Development Economics Research provides economic analysis and policy advice with the aim of promoting sustainable and equitable development.