LILONGWE-(MaraviPost)-About MK15.56 billion of carbon levy has not been accounted for over the past five years, prompting environmental stakeholders to demand an update on utilization.
This is contained in National Youth Network on Climate Change (NYNCC)’s Carbon Levy Management Assessment report covering 2019 to 2026.
NYNCC commissioned the assessment under the Green Corruption Project to assess the state of carbon levy management in Malawi from the 2019/20 financial year to 31 March 2026.
The assessment used a mixed approach with reviews of laws, policies, strategies, budgets, and institutional reports.
The assessment covered the revenue chain from assessment and collection to remittance, Treasury accounting, allocation, utilization, and reporting.
According to NYNCC, the overall objective of the study was to carry out an evidence-based assessment of the extent of transparency and accountability in the collection and remittance of the carbon levy, allocation and utilization of resources from the carbon levy for climate change mitigation, adaptation, and responsive environmental governance.
In an interview, NYNCC National Coordinator Dominic Nyasulu observes that the carbon levy collection has a sufficient legal framework, but it does not give an enforceable relationship between collections and environmental spending.
“Domestic fuel levy generated about MK9.36 billion (60.1%), while the foreign and transit vehicle levy generated about MK6.20 billion (39.9%), totaling MK15.56 billion in collections between 2019 and 2026. These resources haven’t been accounted for, although there are no reports of abuses
“Fuel shortages in the form of limited foreign exchange might have resulted in lower taxable fuel quantities and payments being delayed from 2023 to 2025. Yet they don’t give a good explanation for the huge drop in recorded fuel levy revenue. Other reasons include non-remittance of fuel levy by fuel importing companies on account of fuel pricing, foreign exchange constraints and accumulated arrears in the process,” he observes.
Nyasulu discloses further on report findings, “Fuel levy payments were also highly concentrated: NOCMA accounted for around 59.0 percent and PIL for 35.1 percent of the importer-level payments to be analysed. Together, the two importers contributed about 94.1 percent of the national collections, meaning that changes in their import volumes, liabilities, or payment compliance would have a material impact on national collections.
“As regards utilization, of the MK15.56 billion collected, only MK500 million (about 3.2%) can be traced to an environmental financing mechanism between 2023/24. Carbon levies are not ring-fenced, and the government relies on conditional funding”.
NYNCC appeals, “Strengthen the current Customs and Excise and environmental management legal frameworks to ensure that a predictable carbon levy transfer is made to the Environment Fund, with a transfer formula and timeframe.
“If full ring fencing is not implemented, then establish a formal revenue arrangement that links an agreed amount of carbon levy revenue to identifiable environmental and climate expenditure”.
Nyasalu urges further, “Create separate accounting codes for the domestic fuel levy, foreign vehicle levy and transit vehicle levy so that each stream remains identifiable in Treasury reports.
“Provide quarterly reconciliation of fuel volumes, levy liabilities, importer payments, arrears and Treasury receipts, accompanied by importer-level compliance monitoring”.
About Carbon Levy in Malawi
Currently, Malawi’s carbon levy has two main components. The first is the levy on domestic petrol and diesel prices, which was created by an amendment to the Customs and Excise Tariffs Order in June 2020.
Fuel consumers are responsible for this levy, fuel companies for their costs, and MERA provides regulations and reconciliation for the fuel price.
The second is imposed on foreign-registered and transit vehicles and is assessed and collected by MRA when issuing Temporary Importation Permits and T1 transit documents.
Both streams of revenue are collected separately, but both of them are deposited in a government revenue account at the Treasury, Ministry of Finance.
Leave a Reply