Curbing Illegal Mining and Tax Evasion: Roles of Criminal Justice System
Examining the impact of illegal mining and tax evasion on socio-economic development, peace, stability, environment, and human rights. Proposal of legal reforms and initiatives to combat these illicit activities.
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The Role of the Criminal Justice System in Curbing Illegal Mining and Tax Evasion A presentation made at the Annual National Prosecutors Conference at the Kenneth Kaunda International Conference Centre, Lusaka, 16th -18th September 2024 Presented By: Mr. Dingani Banda Commissioner General Zambia Revenue Authority My Tax, Your Tax, Our Destiny My Tax, Your Tax, Our Destiny
PRESENTATION OUTLINE Definitions of Illegal Mining and Tax Evasion Impact of Illegal Mining and Tax Evasion Roles to be played by Criminal Justice System Challenges in curbing illegal mining Proposed Specific Legal Reforms to be Considered Why curb illegal mining and Tax Evasion Some Initiatives being Implemented 2 My Tax, Your Tax, Our Destiny My Tax, Your Tax, Our Destiny
DEFINITIONS : ILLEGAL MINING & TAX EVASION What is Illegal Mining ? Illegal mining refers to mining activities that are conducted without the necessary permits, licenses, or regulatory oversight. These activities often occur in protected areas, on private land without permission, or in violation of environmental and safety regulations. What is Tax Evasion ? Tax evasion is the illegal non-payment or under-payment of taxes, usually by deliberately making a false declaration or no declaration to tax authorities. 3 My Tax, Your Tax, Our Destiny My Tax, Your Tax, Our Destiny
IMPACT OF ILLEGAL MINING Illegal mining has evolved into an endemic and lucrative enterprise in several regions across the globe and Zambia has not been spared, with serious damaging consequences in terms of: Socio-economic development, due to the high profits generated from illicit activities where government revenue is lost. Peace and stability, proceeds from illegal mining are used to fund terrorist organizations, armed rebel groups, and drug cartels. Illegal mining is also used as both a funding source and a money laundering enabler. In conflict regions, the mining sites are controlled by organized criminal syndicates and have become hotspots for widespread violence. The environment. Illegal mining activities are a hazard to human life, provide unsafe work environment resulting accidents and loss of lives. Illegal mining also causes environmental degradation such as pollution and soil erosion. Human rights in vulnerable communities- child labour is exploited in illegal mining activities thus violating the rights of the children. 4 My Tax, Your Tax, Our Destiny My Tax, Your Tax, Our Destiny
IMPACT OF ILLEGAL MINING Illegal Trade: Thesubsequent illegal trade of gems and precious metals, coupled with corruption and money laundering, is often perpetrated by organized crime. The criminal syndicates in the illegal mining sector, are also often involved in other criminal activities. Tackling criminal activities in the mining sector requires concerted efforts and coordinated policing response by LEAs coupled with an ethical compass that cannot be tilted to accepting bribes. 5 My Tax, Your Tax, Our Destiny My Tax, Your Tax, Our Destiny
IMPACT OF ILLEGAL MINING Tax Evasion- Illegal mining operations typically do not pay taxes, mineral royalties, or fees, resulting in significant revenue loss for government. Challenges posed to tax administration- Illegal mining poses significant challenges to tax administration by reducing revenue, increasing enforcement costs, distorting markets, and complicating data collection and reporting. It also fosters corruption, money laundering and exploits legal and regulatory gaps leading to economic inefficiencies. Addressing these challenges requires a comprehensive approach that includes stronger regulatory enforcement, Judicial awakening to these ills, international cooperation to fight organised criminal syndicates and efforts to reduce corruption and improve institutional integrity. frameworks, effective In all this the CJS has a critical role to play in order to maintain law and order. 6 My Tax, Your Tax, Our Destiny My Tax, Your Tax, Our Destiny
IMPACT OF ILLEGAL MINING Picture by Lusaka Times 7 My Tax, Your Tax, Our Destiny My Tax, Your Tax, Our Destiny
IMPACT OF ILLEGAL MINING Picture by Lusaka Times 8 My Tax, Your Tax, Our Destiny My Tax, Your Tax, Our Destiny
ROLES TO BE PLAYED BY CJS The CJS plays a critical role in addressing criminal behaviour in society through various mechanisms and strategies. The following are some of the mechanisms and strategies through which the CJS can curb illegal mining and tax evasion: Legislation and Regulation: The CJS, in collaboration with legislative body, can play a critical role in combating illegal mining and tax evasion through effective legislation. Legislation on mining must define what constitutes illegal mining activities and set punitive penalties for violations. Establishing a robust regulatory framework that governs mining activities and tax compliance. Such framework must criminalise activities that promote illegal mining. 9 My Tax, Your Tax, Our Destiny My Tax, Your Tax, Our Destiny
ROLE TO BE PLAYED BY CJS Enforcement: Law Enforcement illegal mining by nature is criminogenic, this requires that all LEAs work together to execute their respective mandates. Illegal mining is a fertile ground for corruption, money laundering and tax evasion. There is an urgent need to create a specialized Unit or a dedicated agency that will be tasked with investigating and enforcing laws especially against illegal mining and tax evasion. Interagency Collaboration- Collaboration between different agencies (e.g., police, ACC, DEC and the Tax Authority) is crucial for sharing information and resources to effectively investigate and prosecute offenders involved in illegal mining and tax evasion. Judiciary-Creation of specialized courts such as the EFCC is a progressive move aimed at speedy conclusion of financial crimes. There is need for continuous training of the court officials handling cases involving financial crime. 10 My Tax, Your Tax, Our Destiny My Tax, Your Tax, Our Destiny
ROLES TO BE PLAYED BY OF CJS Prosecution: We cannot eloquently talk about the CJS without mention of the huge role that Prosecutors play. This resource which is so critical and pivotal needs to be armed with training that suits the time we are in. Prosecutors must ensure that perpetrators of illegal mining and tax evasion are prosecuted diligently to the fullest extent permitted by the law. Prosecutors are not merely advocates for the State; they are tasked with a profound duty to uphold the rule of law, ensure due process, and balance the scales of justice. Penalties and Sanctions- A quick perusal of the penalties for illegal mining and tax evasion provided for under the Mines and Minerals Act and various tax statutes show that more needs to be done to include substantial fines, imprisonment, and the confiscation of assets obtained through these illegal activities. 11 My Tax, Your Tax, Our Destiny My Tax, Your Tax, Our Destiny
CHALLENGES IN CURBING ILLEGAL MINING The Mines and Minerals Act No. 11 of 2015 Under the current law it is difficult to effectively curb illegal mining as the penal sanctions for illegal mining are not adequate. A perusal of sections 102 to 114 which provides for offences and penalties clearly shows that it does not speak to the current criminal patterns nor address the malaise the country is experiencing. The penal sanctions need to reflect the gravity of the illegal mining. Perpetrators of illegal mining must be punished severely. 12 My Tax, Your Tax, Our Destiny My Tax, Your Tax, Our Destiny
CHALLENGES IN CURBING ILLEGAL MINING Other challenges include: Mining exploration and exploitation without lawful authority. Possession and trafficking in metals and minerals illegally mined. Lack of monitoring mechanism for setting up of processing plants. Capacity in the identification of minerals. 13 My Tax, Your Tax, Our Destiny My Tax, Your Tax, Our Destiny
PROPOSED SPECIFIC LEGAL REFORMS TO BE CONSIDERED In order for the CJS to effectively curb illegal mining in the country the following is proposed: Mining exploration and exploitation without lawful authority be criminalized with stiff sanctions. Possession and trafficking in metals and minerals illegally mined be criminalized, the criminalization of domestic and cross border trafficking is an essential component of any criminal law combating illegal mining. Criminalization of the setting up of processing plants without lawful authority. Possession of equipment and chemicals used in illegal mining be criminalized and equipment used seized. * There is need to stiffen the penalties against any illegal dealings in the mining sector as this is tantamount to national economic sabotage . Some countries have made such cases treasonable and non bailable just to make it unattractive to many, especially if it involved minerals declared strategic such as gold. 14 My Tax, Your Tax, Our Destiny My Tax, Your Tax, Our Destiny
WHY CURB ILLEGAL MINING AND TAX EVASION? Illegal mining has profound and multifaceted impact on tax administration, undermining the ability of governments to collect revenue and enforce tax laws effectively. Illegal mining operations typically do not pay taxes, mineral royalties, or fees that are required from legal mining activities. This results in significant revenue loss to the government, which could have been used for public services and infrastructure development. 15 My Tax, Your Tax, Our Destiny My Tax, Your Tax, Our Destiny
WHY CURB ILLEGAL MINING AND TAX EVASION? International Implications: Trade Sanctions:- Countries with significant illegal mining activities may face trade sanctions or restrictions from international bodies, affecting their ability to export minerals and other goods. This can reduce the overall tax base and complicate tax administration. Reputation Damage:- The association with illegal mining can damage a country s international reputation, affecting its broader economic relations and trade opportunities. This can have a cascading effect on tax revenues from other sectors. 16 My Tax, Your Tax, Our Destiny My Tax, Your Tax, Our Destiny
SOME INITIATIVES BEING IMPLEMENTED Participation in the Task Force on Illegal Mining and Mineral Trading: The Authority has been collaborating in a Task Force to look at this vice that has made some recommendation on what needs to be done. A number of mineral processing facilities have since been closed across the country. Involvement in the implementation of the Minerals Regulation Commission: The Authority has also supported and been involved in the proposed establishment of the Regulator for the mining sector which is expected to ensure that the mining sector is regulated. My Tax, Your Tax, Our Destiny My Tax, Your Tax, Our Destiny
SOME INITIATIVES BEING IMPLEMENTED Implementation of the Smart Invoice System: the Authority has implemented the electronic invoicing system to curb the invoice trading that a number of companies use to fraudulently recover underpayment of tax due. Implementation of electronic mineral monitoring platforms: the Authority has further worked and continues to work with other entities such as the Ministry of Mines to implement electronic platforms such as the MOSES and relevant interfaces with other systems to enhance the capabilities of electronic controls in the monitoring of the sector to minimise illegal dealings. input VAT resulting in My Tax, Your Tax, Our Destiny My Tax, Your Tax, Our Destiny
THANK YOU My Tax, Your Tax, Our Destiny My Tax, Your Tax, Our Destiny
