LILONGWE-(MaraviPost)- Malawi Minister of Finance, Economic Planning, and Development Goodall Gondwe, on Friday presented the 2017/2018 national budget, which is pegged at MK1,297.2 billion (MK1.3 trillion).
The national budget has been increased by 26.1 percent from the 2016/2017 revised budget which, was at MK977.8 billion. It registers a 13.5 percent increase at current prices, but declined somewhat in real terms.
Finance Minister Gondwe said in current prices, the total revenues and grants are projected to increase by 13.3 percent, and to be slightly reduced, particularly as regards grants, which he said are projected to decline by 8.4 percent. Gondwe said domestic revenue is budgeted to increase by 17.0 percent, and remains at the same level in real terms.
The Minister observes that the true of recurrent expenditure, will decline in real terms from 20.5 percent to 19.1 percent of GDP, whereas development expenditure will increase by 32.6 percent in current prices, and register a slight decline in real terms by 0.6 percent of GDP.
Gondwe disclosed that the wages bill will increase by a total of 10.0 percent, but with wage creep of 3 percent, the total wage increment will be approximately 13 percent.
The major key highlight benefits for low income Malawians in the budget, includes the raising of tax-free PAYE from MK20,000 to MK30,000; and the minimum wage has been increased from MK19,000 to MK25,000 per month. This means that all the people who earn a minimum wage, will be below the threshold of tax-free PAYE.
In the fiscal plan, there is a proposed 200 percent increase of pensions of civil servants who retired prior to 2004; the budget in this category has increased from MK50 billion to MK70 billion.
The majority of the budget is shared by the ministries, with including Education getting MK235 billion, Agriculture, MK192 billion, and health will get MK129 billion; this marks these departments walking away with 18, 15.5, and 9.5 percent, respectively.
On tax measure, Gondwe said Government is introducing an additional bracket of 35 percent on those earning a salaried income above MK3,000,000.00 per month, which will not affect individuals whose earn income is from their businesses.
The minister said Govetnment also introduced a 10 percent excise tax on fee-based TV services, and duty and excise-free provisions for buses and minibuses; these must be less than five (5) years old.
The buses and minibuses that are older than 5 years, the excise taxes 23 percent, will apply on a graduation or progressive basis, whereas the Customs duties, will be 15 percent and VAT will be 16.5 percent.
Sadly, Value Added Tax (VAT) remains on basic needs including water, bread, electricity, soap among others, which will continue hurt more Malawians who earn below one dollar a day.