The Maravi Post

LILONGWE—People, the cost of living is way, way up. Think of rent, food plus all the taxes people have to pay for goods and services. Life’s hard for civil servants. Granted, how about then a 20 percent salary increase for all civil servants?

If Eunice Makangala (Blantyre City Central) had the wherewithal, she could do it without batting an eye. But she doesn’t’ have that power so she went to parliament where she made her case.

“Is the already thin Civil Servant going to survive with too many taxes heaped on [him or her?] The Government charges PAYE on their salaries, banks collect commissions, land lords push the taxes on rentals and the shop owners too [pass them] on. I suggest 20 percent increment to cushion all the taxes that have been introduced.”

She had another idea.

The zero deficit budget (ZDF), which is supposed to be financed using local resources – the reason taxes have gone up – is hurting the poor. Instead of introducing it all at once, the ZDB must be done in phases.

The lawmaker challenged the government to find ways of increasing productivity in the private sector to boost the economy instead of experimenting with policies that have a negative impact on the lives of ordinary people.

Former finance minister Ken Kandodo (Kasungu Central), who presented the ZDB when it was introduced last year after it became clear that donors, concerned about human rights and and economic mismanagement,  would cut off aid, responded to Makangala’s concerns.

Defending the ZDB, he said countries like Kenya don’t depend on donor support for their recurrent expenditures. But what he didn't say is that Kenya has far stronger economy and perhaps in a better position to absord the ZDB shocks. Kandodo however was optimistic.

“Looking at the trends in revenue and expenditure one would see that it’s achievable,” he said. “There’re many problems associated with budgeting with donor support in mind including lack of predictability. Fiscal discipline must continue to reduce wastage.”

The lawmaker repeated the government position on currency devaluation as suggested by the global lender International Monetary Fund. He said devaluing the Kwacha wouldn’t help anybody as Malawi has a narrow export base. It would contribute to inflation and not boost exports, he said.

Others have argued that the very reason Kandodo gives - that of lacking a broad export base - and a narrow tax base in the country base from which to raise revenue, the ZDB timing was off.
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©2012 The Maravi Post. Reproduction authorised, with usual acknowledgment