July 17, 2019 / 9:21 AM / a month ago

UPDATE 1-Zambia finance minister to outline position on sales tax soon

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LUSAKA, July 17 (Reuters) - Zambia’s new finance minister said on Wednesday he would soon give a clear position on replacing the country’s value-added tax with a non-refundable sales tax.

Since being appointed earlier this week, Bwalya Ng’andu has sought to mend fences with Zambia’s mining industry. The proposed tax is a sore point between the government and mining companies in Africa’s second-largest copper producer .

“We intend to give a clear position within the next few weeks as to which way we are going on this one,” Ng’andu said during a briefing on the country’s economy. He had hinted when he was sworn in on Monday he might put off implementing the tax.

The government was looking into the issues that came out of countrywide consultations, including threats of job losses after implementing the tax, he added.

A committee would also examine the impact of a new tax regime on miners, he said. The country’s Chamber of Mines has said it will stymie investment, push some producers into the red and hit production.

The across-the-board 9% tax on sales of goods and services, originally due to be introduced in April, was intended to help rebalance Zambia’s debt-laden economy.

Ng’andu, who took over after his predecessor was suddenly sacked on Sunday, on Wednesday reaffirmed a target to reduce the deficit to 6.5% of gross domestic product from the current 7.5%. He said he would target savings of $500 million per year over the medium term by suspending some projects and cancelling others.

Economic growth of 2% to 3% was expected in 2019 before increasing in 2020, he said. (Reporting by Chris Mfula; writing by Emma Rumney; editing by Larry King)

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