Problems in Acquiring Mineral Revenues for Financing Economic Development: A Case Study of Zambia During 1970–78

A bstract . During the 1970s Zambia granted tax incentives to transnational mining companies (thereby foregoing some revenue ) in order to achieve expected investment benefits to the economy and government. The Government also acquired ownership interests in the companies via asset acquisition. Global market forces turned against Zambia's interests, and expected benefits were not forthcoming because company profits had become the sole tax base in the mineral sector. Zambia's experience from 1970 to 1978 suggests that it and other mineral export countries should (a) evaluate carefully whether reducing the effective tax rate on company profits actually induces investment , and (b) consider thoroughly whether a tax scheme that includes a proper mix of profit, mineral and export levies is more appropriate than a single tax base.