Copper Tax for ARV Coverage: A Necessary Solution to an Emerging Crisis

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Zambia is in the midst of an HIV/AIDS epidemic: Zambia currently ranks 6th world-wide in HIV prevalence and life expectancy has stagnated.

Despite Zambia’s efforts at improving access to antiretroviral (ARV) medications, reliance on donor funds is unsustainable: of the $120 million USD allocated to ARV treatment in 2013, over two-thirds is donor contributions, and this percentage has increased as the burden has risen. Current estimates have a gap between ARV demand and government resources at over $200 million per year in 2020.  Foreign investment dictates expenditure, and infrastructure, reduces local control, and has been shown to create instability, reduce efficiency and jeopardize program success.

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An obvious solution is to create an HIV fund through re-instatement of the copper “windfall tax”. Despite being 80% of Zambian exports, taxation on copper mines represent only 2.2% of government revenue, as foreign investment has avoided fair taxation.  In particular, the re-introduction of a “windfall tax”, which was abolished in 2009 due to fears of the global recession (that were not realized), would provide an easy mechanism to generate the necessary funds.  This taxes foreign copper investment if revenue becomes twice the cost of production, and would simply be a return to pre-2009 taxation policy.  This would contribute over 50% ($100 million USD) of ARV spending by 2015 and 100% ($200 million USD) by 201711 and would be earmarked for ARV treatment and a capital investment “HIV Trust Fund” that will encourage private investment and accrue interest.  Bringing back the windfall tax and ear-marking revenues for ARV would provide a sustainable solution to the HIV crisis with negligible impact on the booming copper industry.

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3 Responses to “Copper Tax for ARV Coverage: A Necessary Solution to an Emerging Crisis”

  1. bsmoker Says:

    Thank you for sharing this compelling tax policy proposal. It certainly makes sense to re-invest a portion of Zambia’s copper revenues to address access to ARV for HIV/AIDS patients in the country.

    Can you explain your reasoning for specifically connecting taxation on copper revenues and addressing Zambia’s HIV crisis? I ask this because the very excellent dissertation you included, authored by Mr. Nsama, focused on changing Zambia’s tax laws to reduce poverty, not to address HIV per se. Nsama points out that poverty helps perpetuate the persistence of many infectious diseases other than HIV, including malaria, TB, and measles. Although there has been some infrastructure development in the past few decades, 36% of the population does not have access to a consistent supply of drinking water, and more than 50% lack access to adequate sanitation facilities (source: http://www.unicef.org/infobycountry/zambia_statistics.html). Would it be possible to expand the scope of the windfall tax reform effort to address other public health initiatives within Zambia, or will the anticipated revenue only be adequate to cover the ARV effort for now?

  2. mvertenten Says:

    Great information I was not aware of this kind of tax usage to fund public health projects. It would be great to have a sentence or two addressing business interests to show both sides of the issue. Or show political support/opposition for tax legislation. Thanks.

  3. tahir4696 Says:

    This post has in fact sparked a revolutionary idea in the context of high prevalence of HIV/AIDS and its prevention and expensive treatment approaches in resource poor countries like Zambia. In my opinion it is a great idea to be followed by many nations like Zambia. It is a glistening example to be pursued by large numbers of developing countries facing huge burden of HIV epidemic. By focusing on such booming industrial opportunities, creation of HIV/AIDS control funds will serve a long way to tackle this devastating public health issue. The policy makers including leadership and management need to devise concrete policies and requisite legislation to implement such idea. A comprehensive advocacy is needed to create awareness and to ensure participation and coordination of all stakeholders. The role of media both print and electronic cannot be overemphasized in this regard.

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