HOW MUCH REVENUE IS ZIMBABWE LOSING TO GOLD SMUGGLING?

https://www.iamrutendo.online/post/how-much-revenue-is-zimbabwe-losing-to-gold-smuggling

Zimbabwean gold buttons

Zimbabwe Gold Production

Zimbabwe officially produced 35.38 tons of gold in 2022. The gold price per ton was $57,080,333 x 35.38 …………….…………………= $2.01 billion.

Of the total gold output, the government is due taxes, royalties, smelting fees paid at Fidelity, and licensing fees since in real terms the gold belongs to the miner and or the buyer after they have paid their costs and taxes.

Mining Tax

3% inclusive of royalties and presumptions

…………………………..............….= $60.6 million.

Millers Tax

58 millers x $8000

.……………………………..............= $464,000.

Explosive Holder Tax.

300 holders x $2000

…………………………..............….= $600,000.

Registered Miners Tax

40,000 registered miners x $75/2 years

……………………………...........…= $1.5 million.

*Annual Taxes From Gold*

A rough estimate is …...........…..= $63.1 million.

Annual Tax Losses From Gold

Estimated leakages, assuming 100% smuggling and 1.45 million miners not paying licenses, means the government is losing ….........…= $115 million.

This is a relatively high figure based on overinflated assumptions, but losses still fall below the amounts people claim are being lost to gold smuggling every year.

Nevertheless, over 24% of taxes collected by ZIMRA is VAT, and artisanal miners are known to pay a lot of VAT due to high consumption. This also means that smuggled proceeds eventually end up in the VAT kitty, although that doesn't justify smuggling.

In conclusion, at current levels, the maximum amount the government could directly make from gold mining is about $300 million dollars. As of today, Thursday, March 30th, 2023, the issue of fair and efficient tax collection in the mining industry persists.

One of the major issues in government tax collection is the lack of differentiation between licensing and registration fees for both artisanal and large-scale miners. This puts a heavy burden on small-scale miners and discourages them from registering and paying taxes. It also encourages smuggling.

In addition to this, only a small fraction of the estimated 1.5 million artisanal miners are registered and paying taxes, leading to a loss of over $51.9 million in potential government revenue every year.

These tax revenues are necessary for government to improve services, infrastructure, training, support and conditions for these small-small miners, as well as rehabilitating the environment that suffers under their operations.

While some artisanal miners may see the current taxes as too high, it is important to remember that neglecting tax payments and environmental rehabilitation will have negative consequences for our future generations. Therefore, it is crucial that small-scale miners begin to pay their fair share of taxes and take responsibility for restoring the environment.

By Rutendo Matinyarare of ZASM.