An artisanal miner or small-scale miner (ASM) is a subsistence miner who is not officially employed by a mining company, but works independently, mining various minerals or panning for gold using their own resources. Incessant cabinet changes with the portfolio for mining targeted more directly than others has been a focus of discussion lately, with President John Magufuli ardent and willing participants in that discussion.
On 22nd January, the President attended a meeting with small scale miners where he laid out reasons for changing ministers in the docket being results or improvement in organization in the sector, part of which relates to monitoring artisanal gold mining and ensuring that the vital metals are sold in Tanzania. There is an element of realism in the solutions or policy trajectory that the president sketched out, but that approach is still a lot of baggage to leave at the gate.
The most realistic aspect of what the president sketched out as to ensuring gold is sold to the Central Bank or its agencies in the regions was to cut taxation so as to attract miners to sell their gold to national institutions.
At the meeting, the miners raised their voices against the crippling taxes. Miners are expected to pay 18 per cent of their annual turnovers as Value Added Tax (VAT), a royalty of 6 per cent, 5 per cent with-holding tax, inspection and clearance fee of 1 per cent and 0.3 per cent service levy. The President ordered the Minerals Minister, Doto Biteko to work on the grievances of the miners which resulted in the scrapping of the 5 per cent with-holding tax, thus leaving the miners commending the government for the move.
It is a cardinal aspect of the country’s psychological mould that this sort of truism has waited more than 55 years of independence to start sinking into reality, that high taxes cause smuggling.
Had this impression been there during the First Phase presidency, plenty of the trouble we went through including economic decline, would not be there.
Even though it cannot be said that the policy approach is taking a sufficiently realistic outlook to expect that the smuggling will be ended because realism has taken over owning to a major policy drawback: that of focusing on public revenues as the most important component of what the country earns in the sector.
As a matter of fact, revenues are not the principal element in any sector of a country’s economy but private earnings, and then the level of compliance or enforcement where necessary, of taxation. Revenues take high profile in Tanzania due to the privileged role of the state in economic activity that we worry about development more than others, often.
The reason is not because other countries are not patriotic but their patriotism is different, their focus on how their countries are governed is a combination of freedom and fair play, neither of which is highly regarded here.
Instead of doing business because they are free and put in their skills and capital expecting a profit and make the business grow, there is an impression that one is just allowed to conduct business, and that ought to enable the government obtain more revenues.
With the country now awash with millionaires in all directions, whether or not they are recognized in Forbes Magazine, the political concern pendulum has swung where it has not reached since 1992, as to why Tanzania’s crops, minerals are smuggled rather than sold internally.
When the president starts to grapple with that issue, he will discover that people wish to be recognized to be producing for their own welfare, that of their families and thus are ready to pay fair taxes for wider public needs.