LILONGWE-(MaraviPost)-The Parliamentary cluster committees on Agriculture, Natural resources and Climate change have condemned former finance Minister Felix Mlusu for being behind Agricultural Development Marketing Corporation (ADMARC)’s failure.
Chairperson for the parliamentary committee on Agriculture Sameer Suleiman disclosed this on Tuesday, February 22, 2022 at Parliament building during a meeting involving officials from ADMARC and stakeholders in agricultural sector.
Suleiman said the minister failed to rescue ADMARC from debts that have lead the institution to be in a deep mess.
“The former Minister was useless and had no use to the development of ADMARC as the corporation is just working for the benefits of commercial Banks as they are the ones profiting,” Suleiman said.
In his remarks ADMARC,Chief Executive Officer, Rhino Chimphiko said the corporation is in need of MK48 million to purchase maize and other commercial crops.
Chiphiko said the corporation struggled to purchase maize last year as they had inadequate funding.
Meanwhile Chiphiko has disclosed that government owed the corporation MK23 billion which is also one of the factors that prohibit ADMARC to operate well.
In the 2022/23 financial budget,the ministry of Agriculture was allocated about MK284 billion for the enhancement of the agricultural productivity as well as achieve permanent food security in the country.
Minister of Finance, Felix Mlusu, has announced that he will this week embark on 2022/2023 pre-budget consultations with stakeholders ahead of the end of the current budget in March next year.
According to the spokesperson in the ministry of finance, William Banda, the consultations are planned to start from Friday this week up until Wednesday next week.
However, more consultations through channels will still continue up to January 18, 2022.
Commenting on the development, an economic commentator, Millward Tobias, said it is high time government started to implement Malawi’s Alonsg term plan of 2063 in the upcoming budgets so as to align the national development agenda with the same.
Tobias said: “Preparation of the budgets and consolidating the inputs from the stakeholders do take time. That is why it is important this time around that we take the views, analyse them; where we don’t understand, invite them again to a round table until we make sure that the aspirations of Malawians are included in the budget.”
Meanwhile, members of parliament will be meeting to deliberate on the current budget which is ending on March 31, 2022.
The 2021/2022 fiscal year is a nine month year ending in March next year. It was pegged at K2 trillion.
Mlusu arriving at the parliament for budget presentation this year
BLANTYRE-(MaraviPost)—Civil servants across the country have taken a swipe at Tonse Alliance government for failing to implement a restructured Pay As You Earn (PAYE) as outlined in the 2021/2022 bational budget.
Presenting a budget in parliament in May this year, Finance Minister brought in duty free week, presented a restructured Pay As You Earn (PAYE) among various new tax measures.
“Government has now introduced two new Pay As You Earn (PAYE) brackets of 25 percent for incomes between K100,000 to K1.0 million per month and of 40 percent for incomes of more than K6.0 million per month
“Accordingly, the new monthly PAYE schedule will be K0 to K100,000 at 0 percent; between K100,000 to K1.0 million at 25 percent; between K1.0 million to K3.0 million at 30 percent; between K3.0 million to K6.0 million at 35 percent; and from K6.0 million and above at 40 percent,” he said adding that the new measure will promote distribution of wealth in the country and increase disposable income for all low income earners.
However, reports reaching Maravi Post indicate that the September payslips do not reflect the change in PAYE as indicated in the budget.
Some of the civil servants who receive their salaries through district councils have told Maravi Post that there is a deficit of about K17 000 if the restructured PAYE is really incorporated.
“According to the money we have received, there is no change on the Pay As You Earn (PAYE). Our calculations point to the fact that the government has used the same 30 percent not 25 percent as outlined in the 2021/2022 budget,” said one of the civil servants on condition of anonymity.
However, Maravi Post has it on authority that the pay hike has been implemented in the September salaries, including salary arrears for the same.
LILONGWE-(MaraviPost)-Malawi Parliament on Wednesday, June 23, 2021 passed the MK1.995 trillion 2021/22 National Budget in a record three and half hours (210 minutes).
Social and political analysts have described as either a demonstration of top-notch efficiency on the part of Members of Parliament (MPs) or an acute shortage of budget analytical skills.
The passing of the budget came just 24 hours after Finance Minister Felix Mlusu announced a MK5.5 billion total adjustment to 17 critical areas in the financial plan which lawmakers had expressed concern about.
Scrutiny of the budget during the Committee of Supply started at 2pm yesterday with a 30-minute break in between and by 6pm, all the 56 votes in the budget had been passed.
University of Malawi Economics Professor, Ben Kaluwa told The Daily Times that the supersonic speed at which the budget was passed could either mean efficiency or lack thereof on the part of lawmakers.
Kaluwa added that the adjustments by Mlusu on the eve of the Committee of Supply might have performed some magic as it answered the various concerns raised by lawmakers during the cluster stage.
On his part, Centre for Social Accountability and Transparency (CSAT) Executive Director, Willy Kambwandira, expressed worry over the lack of budget analytical skills among lawmakers.
“Passing a budget is not bad but our concern is that our parliament is the only parliament in the region that spends the least time scrutinising the budget.
“This is a bad sign and a bad tradition. This has been the trend over the years but they can do better. It is obvious that they have not fully scrutinised it in relation to performance tallies and national priorities,” said Kambwandira
The legislators scrutinised 56 votes of allocations to different ministries, departments, and agencies.
The National Government Finance Committee has the largest share at MK336 billion while the Ministry of Finance has been approved to use MK26.1 billion.
Mlusu explained that the Local Government Finance Committee got a huge allocation because it is responsible for the councils in the country.
“There are a lot of activities and programmes that the local authorities have to do. That is why we are giving them a lot of funding,” he said.
The minister said this was in line with the decentralisation programme.
The Office of President and Cabinet got MK18.9 billion, National Assembly MK15.2 billion while the Ministry of Agriculture got MK223.4 billion.
Nevertheless, state-owned organisations have got MK108 billion, the Roads Fund Administration MK125.8 billion while the Malawi Revenue Authority has received MK30.9 billion.
Mlusu was excited that the budget passed in a single day which has not been the case in previous budget sessions.
In the budget taxes on basic items including cooking oil, soap, water, sugar, electricity remain intact despite general outcry.
BLANTYRE-(MaraviPost)—Malawi’s lawmakers have woken up from their slumber and have demanded detailed information from the Ministry of Finance on how state owned companies were sold under privatization programme some years ago.
Privatisation, a programme which was championed by the former first democratically elected President Bakili Muluzi, saw many Malawians losing jobs as government owned companies were sold to private businesspersons, most of whom were foreigners.
The demand follows the adoption of a motion by Member of Parliament for Mzimba North Yeremia Chihana. He said there was need for Parliament to appreciate how the exercise was conducted and if Malawians have benefited from the exercise.
Speaking in the National Assembly, Chihana said most companies were sold to foreigners at undervalued prices and that a lot of Malawians lost their jobs. Other lawmakers suggested that Government should repossess such companies.
According to Chihana, the Public Private Partnership Commission which is supposed to report to the House on the status of privatisation on an annual basis has never done that since it was instituted.
“Since the privatisation of government companies in the early 90s, Malawians don’t know how much was realised and how the money was used.”
Chihana expressed concern that most companies were sold along with vast pieces of land, a development he argued was irregular.
“It is high time Malawians know what happened with the money from their companies, that is why we recommend a commission of inquiry to investigate how the process was handled and what is the current status of the deals.”
Some of the notable government owned companies that were privatised include, Malawi Telecommunications Limited (MTL), Malawi Railways, Mapeto David Whitehead and Sons, Malawi Savings Bank and Chipiku Stores.
In the year 2000, it was reported that Malawi’s four-year old privatisation programme had earned the government of President Bakili Muluzi about US $21.7 million from the sale of 35 state-owned enterprises.
It is my belief that you have thoroughly read the 2021/2022 budget. You may have your own analysis of this budget depending on your knowledge, patriotism and political affiliation.
Missing links in the budget
It is an unrealistic budget because the exchange rate for a dollar is already over MK900 while the minister of finance projects it at MK780. With Covid-19 effects and inflation, there is no way Malawian currency can appreciate contrary to the wishes of the Minister of Finance, opposition Democratic Progressive Party (DPP) Joseph Mwanaamveka argues.
The budget is debt-ridden with a deficit of MK811.70 billion.
The budget is consumptive. 71% of the total budget is for recurrent expenditure while only 29% for development.
The budget is not aligned with Vision 2063. Only few pillars of Vision 2063 have been addressed in the budget.
Not enough funds were allocated to ADMARC, Ministry of Health and Ministry of Education.
Government has not negotiated better prices for tobacco farmers.
Only a few 2,700 groups benefited from NEEF funds.
There are no 900 health posts in the budget contrary to the claims made by President Lazarus Chakwera in his State of National Address (SONA). Was he just trying to hoodwink Malawians?
There is no mention of many campaign promises in the budget such as monthly stipend of MK15,000 to elderly, free water and electricity connection, mega farms, bullet train etc… Is Tonse Alliance government serious? Kapena akuzetenga ngati zamasanje?
90% of people who lost jobs are from Southern and Eastern regions. Where is unity or servant leadership Reverend Chakwera is preaching?
In a cabinet of 31 members, only 60 % are from one district – Lilongwe. Nepotism, tribalism and ethnocentrism have just shifted from DPP camp to Malawi Congress Party (MCP) camp. No mindset change contrary to what is preached in Vision 2063.
Recommendations
Increase funding to ACB.
ACB must further investigate the misappropriation of COVID 19 funds and NOCMA fuel scandal.
Enact policies that empower indigenous Malawians so that they can invest in small businesses.
Government must cut down unnecessary international trips as part of austere measures to cut down cost. It was exorbitant and lavish spending when Mkaka chartered a private plane amid financial woes Malawi is facing.
Government must reduce international borrowing to mitigate huge public debts
Government must find means to stabilise the cost of essential commodities such as cooking oil, bus fares, bread rather reducing the price of opaque and malt beer. Abusa a Chakwera mwatani kodi?
Relax the restrictive NEEF collaterals so that loans should benefit the real disadvantaged local Malawians.
Government must implement policies that ensure that 60% of government contracts are awarded to indigenous Malawians.
Government must construct many community colleges
Government must not only concentrate on Affordable Input Programme (AIP) but it should also consider other areas such as climate change, irrigation development, livestock production etc…
Increase more funding allocation to the Ministry of Education, Agriculture and Health
Diversify sources of power supply such as coal, solar etc…
NEEF funds must benefit all Malawians not only MCP members.
Government must indicate the actual time when duty free week, free and water connection, cheap passports will be implemented. Osamangolubwa
There is already $3, 000 duty free waiver and therefore Government must just raise it $6,000. Otherwise Tonse Alliance Government is just hoodwinking its citizens on duty free week.
[Source : A response to the budget by DPP and UDF Finance spokespersons]
About the Author: Rick DZIDA is a social media and political commentator and send feedback to rdzida@gmx.com
Disclaimer: The views expressed in the article are those of the author not necessarily of The Maravi Post or Editor
MZUZU-(MaraviPost)-The former ruling party, Democratic Progressive Party (DPP) has punched holes in the second Tonse alliance budget of 2021 to 2022 national budget, describing it as highly consumptive and debt ridden.
Responding to the budget presentation by the Minister of Finance, Felix Mlusu on Monday, DPP’s economic and financial thinktank, who is also a former minister of Finance, Joseph Mwanamvekha, said the budget does not realistically represent the situation on ground and it is unimplementable.
“I was summarising the budget as unrealistic; a budget that is debt ridden, because there is too much debt in there, and also a budget that cannot be implemented. That’s what I can say as I said in the budget” ranted Mwanamvekha.
On 28 May this year, Finance minister, Felix Mlusu presented the 2021/2022 national budget which estimated to the tune of K1.99 trillion and on Monday this week, lawmakers started to dissect it.
The house will be expected to pass the budget after its members have deliberated on it vote by vote in their committees of supply.
LILONGWE-(MaraviPost)-Scanting revelation The Maravi Post has corroborated with Malawi News shows that five board members and two management officers of Malawi Communications Regulatory Authority (Macra) traveled to Dubai for training on corporate governance and regulatory masterclass on Information Communication and Technology (ICT) at Pinnacle Training Institute and are expected back today, June 12, 2021.
While Minister of Finance Felix Mlusu is facing a MK718 billion deficit for the 2021/2022 National Budget, Macra board of directors just blew over MK46 million for attending this two-week orientation.
Rights activists and economic experts have since described the move as wasteful, unjustified and abuse of resources.
We have also established that every Macra board member is entitled an external travel allowance of US$480 per day, which is equivalent to MK386,400 (at the exchange rate of MK805 to a dollar).
This means that for the two week period, each board member pocketed not less than MK5,409,600. In total, all the five board members got not less than MK27, 048,000.
Expenditure for air tickets for all the five was about MK7.5 million as each air ticket cost about MK1.5 million.
Our calculations show that Macra spent about MK34,548,000 for the board’s allowances and air tickets.
We have also established that the two management officers, a legal counsel and an economist who accompanied the board, got daily allowances of US$400 and US$375, translating into MK322,000 and MK301,875 respectively.
Such that for the 14 days, the legal counsel got MK4,508,000 while the economist got MK4,226,250.
In total, the institution spent about MK3 million on air tickets for the two managers and about MK8,734,250 on allowances.
Total allowances for the board members and the two management officers come to around MK46,282,250. Macra Communications Officer, Clara Ngwira, confirmed and justified the board training in Dubai to Malawi News.
Ngwira disclosed that the trip was already budgeted for in Macra’s 2020/2021 annual budget.
“It is part of capacity building for our board members as most of them are new to ICT regulation. We locally conducted training on Macra overview and ICT regulation after their appointment and this time the training is on corporate governance and regulatory master class on ICT,” Ngwira said in an interview.
She also disclosed that each board member collected an allowance of US$480 dollars per day for two weeks and about MK1.5 million each for the air ticket.
Ngwira also confirmed that two management officers accompanied the board.
Justifying the training in Dubai, Ngwira said: “Management considered various options on the training and settled for Pinnacle Training Institute because it is a renowned training provider in Dubai using different experts. Conducting the training in Malawi would result in fewer experts traveling to Malawi and that would dilute the richness of the training.”
But some governance institutions and economic experts have laughed off Macra’s justification, describing the training as wasteful and reflecting badly on the appointing authority for choosing incapable people to oversee statutory bodies.
“Sending board of directors for training demeans the board members. It reflects that management could be noticing deficiency in their skills. Further and more dangerously, sending board of directors for training reflects badly on the President as the appointing authority. In essence, Macra is saying the President appointed people whose capacity needs beefing up,” Milward Tobias, Director for Centre for Research and Consultancy, said.
HRDC chairperson Gift Trapence demanded a better explanation from Macra for organising such training overseas.
“Macra could have done better. There are so many better training facilities in Malawi. This is abuse of resources and should not be tolerated,” he said.
Economist Hopkins Kawaye, who is based at Catholic University of Malawi, wondered why the board had to fly all the way to Dubai for such training when President Lazarus Chakwera and Vice President Saulos Chilima have been attending high level meetings virtually because of Covid-19 pandemic.
“This is typical waste of government resources. Macra is demonstrating fiscal imprudence,” he said. Another economist, Tchereni Betchani, said although the training may have been budgeted for, it was important for Macra to be prudent in making its decisions.
“It is really appalling to see people going to blow up finances that huge. This is extravagance,” Betchani said.
“They may have budgeted for this training and the budget may have been approved. In any case, austerity needs to be exercised by everybody particularly those in senior positions needing to make important decisions. It will be difficult for the board to question any extravagance given that they led in doing so” added Betchani.
Macra has been entangled into fraudulent acts of siphoning public funds for petty activities while failing its core mandate of serving Malawians.
BLANTYRE -(MaraviPost)-The country’s social monitoring body Centre For Social Concern (CFSC) says the current 2021/2022 national budget key indicators favour than ordinary Malawians.
According to CFSC, the proposed budget presented the August house did not address the challenges which the poor Malawian citizens are facing.
The centre cited low minimum wage, unfair tax policies, unable to contain cost of living arguing that the budget will not trickle down meaningful towards the poor lives.
CFSC has also proposed for the removal of free custom duty for elites such as members of parliament,ministers and Judges who earn high income from the government as this will reduce inequality and poverty in Malawi.
The body therefore has pleaded with Members of Parliament (MPs) to holistically scrutinize the budget with majority of poor people in mind with an aim of ensuring that the attainment of United Nations Sustainable Development Goals and our own blueprint of Malawi agenda 2063.
“The budget should aim at empowering and uplifting those who are in abject poverty and not simply favour the upper class the high income earners”, urges CFSC in a statement made available to The Maravi Post
Below is CFSC statement on 2021/2022 National budget:
CITIZENS DEMAND FOR INCLUSIVE AND PRO POOR BUDGET – A GLANCE AT THE 2021/2022 BUDGET PROPOSAL PRESENTED BY MINISTER OF FINANCE HONOURABLE FELIX MLUSU
BACKGROUND AND INTRODUCTION
The Centre for Social Concern (CfSC) brings you another reflection on the budget as it does in most of the years. Centre for Social Concern (CfSC) founded in 2002, a faith-based organization, promotes research and action on social issues, linking the Christian Faith and Social Justice. The CfSC aims at transforming the unjust structures in Malawian society through research and advocacy so as to ensure sustained change in policies for the betterment of all in line with their human dignity.
In the spirit of exposing the plight of the poor and with the realization that the average person is struggling to afford even the most basic of monthly commodities, CfSC, through its Social Conditions Research Programme conducts the “Basic Needs Basket” (BNB) survey since 2002. The Programme aims at gathering facts through research and to use those facts to lobby and advocate for change in policies and/or practices that inhibit attainment of sustainable livelihoods. The hallmark of the project is to contribute towards a humane and socially just Malawi. The Centre’s activity dwells on four pillars, namely Economic Governance, Active Citizenship, Social Conditions Research and Interreligious Dialogue.
The input to the budget falls under the Economic Governance pillar and Active Citizenship pillar, but informed with data from the Social Conditions Research, which documents through Urban and Rural Basic Needs Basket (BNB) on the cost of living.
The 2021/2022 budget that was presented by The Minister of Finance is the first under the new National Vision, The Malawi 2063. National Planning Commission laid out a national development blueprint, the Malawi 2063 which outlines that by the year 2063, the Malawi we want should be “An inclusively wealthy and self-reliant industrialized upper-middle-income nation.”
The budget has, therefore, designed to set Malawi on the trajectory towards the achievement of the nation’s aspirations towards 2063.
In the spirit of exposing the plight of the poor, Centre for Social Concern carries out the budget analysis to determine whether the budget that has been formulated and presented to the cabinet will help to address the challenges which the poor citizens are facing or not.
THE CENTRE’S POINT OF VIEW ON THE BUDGET
2.1 Agriculture Sector
The Tonse Alliance government through Malawi Congress Party leader, Dr. Lazarus Chakwera, campaigned on a ticket to transform Malawi into middle income economy by building a capable democratic development State. Malawi being an agricultural country, most of the campaign promises by current Tonse Alliance government were dominated by promises to transform agriculture sector in order to ensure food security, improved income and creation of employment. Going through Tonse Alliance manifestos the campaign centred on production and productivity issues, markets and marketing issues, agriculture services and value addition issues. Agriculture, surely, is on priority number one on Malawi 2063 agenda.
The Minister of Finance Honourable, Felix Mlusu, reported that the Agriculture Sector has been allocated MK284.4 billion which is 2.8 percent of GDP, and representing 14.3 percent of the total budget. This provision is intended to enhance agricultural productivity as Prescribed under Pillar One of the Malawi 2063 and to achieve permanent food security for all Malawians. These resource or allocation will cater for wages and salaries for officers in the sector.
Out of the MK284.4 billion which is allocated to Agriculture Sector, the Affordable input program has been allocated with MK142.0 billion which is expected to achieve an outreach of not less than 3.5 million farming families. This is about 50% of the sector budget.
To reduce dependency of smallholder farmers on subsidies, CfSC is, therefore, proposing to the Members of Parliament to consider upward adjustment of budget on agricultural development projects in order to improve productivity and to promote structured markets. An increase in the present structured markets will lead to profitable farming, thereby increase income for smallholder farmers. It is envisaged that profitable farming may reduce burden on tax payers’ money through subsidies. The Members of Parliament need to consider in investing in production of agriculture products for the regional and international export markets. This in effect, would improve the incomes of smallholder farmers at household level and create employment. The increase in allocation in development agriculture can also boost the availability of foreign exchange at macro level, thereby contributing to sustainable economic growth and development of this country.
2.2 Minimum Wage
According to 2018 National Statistical Office (NSO) about 9 million Malawians are living below poverty line. Given this situation, if Malawi has to move forward, then this unacceptable prevailing social-economic state of affairs should be addressed. The poor people are facing numerous social economic challenges due to post 2019 elections and global pandemic Covid-19.
There is, therefore, an urgent need to undertake initiatives aimed at social and economic transformation. An increase in minimum wage is one of the initiatives that the government must implement to bail Malawians out of poverty. So far, the government through the Minister of Finance in the latest presented budget to the Parliament, has maintained the minimum wage for 2021/2022 proposed budget. Centre for Social Concerns has noted with concern that by maintaining the minimum wage, more Malawians will be pushed into poverty bracket.
Studies conducted by Centre for Social Concern through monthly Basic Needs Basket (BNB) findings of 2020 and 2021 revealed that the cost of living is increasing due to global pandemic and the weakening of the Kwacha. In April, 2020 the average cost of living was over MK209,000 and is increasing every month. Food poverty line is over Mk118,000. The current minimum wage of MK50,000 cannot support to buy food that provide adequate nutrition and buy essential household needs.
The low minimum wage is not necessarily due to performance of our economy, BUT total negligence and maintenance of exploitive policies. Centre for Social Concern believes that an increase in minimum wage will support the majority of Malawians to move out of poverty line. As mentioned above, the poor Malawians are greatly affected by the global pandemic of Covid-19 and negative effects of the post-election demonstrations. It is, therefore, imperative to formulate a budget that will also cushion or embrace poor people in Malawi who form the majority of the population. The budget should not just carter or support few rich people. As a country we also need to put a deliberate policy to cushion low income earners who are struggling to survive during this pandemic period.
Centre for Social Concern feels that the 2020/2021 budget is mostly focusing on economic recovery of the rich people. The Centre believes that an increase in minimum wage will help majority of Malawians in attaining their rights such as right to food, right to education, right to access to quality health services, and right to life. The low minimum wage of MK50,000 per month is impinging Malawians to their dignified life. There is a lot of discrimination due to provision of low minimum wage that was set by government. A lot of Malawians are wallowing in abject poverty due to provision of low minimum wage.
2.2 Taxation Justice
Centre for Social Concern has for a long time advocated for progressive tax systems which will not only increase the revenue basket but fairly distribute the same to reduce the gap between the rich and the poor.
CfSC, therefore, agrees with what was said by the Minister during the presentation of this year’s budget that a good tax system needs to conform to or with the principles of progressiveness or vertical equity. This implies that high-income earners should pay more taxes. The Minister announced the introduction of two new Pay as You Earn (PAYE) brackets of 25 percent for income between MK100,000 to MK1.0 million per month and of 40 percent for incomes of more than K6.0 million per month. Accordingly, the new monthly PAYE schedule will be MK0 to MK100,000 at 0 percent; between MK100,000 to MK1.0 million at 25 percent; between K1.0 million to K3.0 million at 30 percent; between K3.0 million to K6.0 million at 35 percent; and from K6.0 million and above at 40 percent. He said that this is expected to promote distribution of wealth in the country and increase disposable income for all low income earners.
Centre for Social Concern observed that some proposals on changes of tax policy will be favouring the rich other than the poor people. According to the Minister the Free tax band was left at MK100,000 and citizens earning between Mk100,000 and MK1 million will be taxed 25%. Centre for Social Concern is of the view that this is an injustice to low income earners. The cost of living is now at MK209,000. Taxing 25% to Malawians earning less than MK200,000 is unfair considering that the same government has proposed some tax measures which will only benefit the rich . Some of the taxation policies favouring the rich are:
The government has introduced Customs Procedures Code (CPC) to cater for duty free importation of motor vehicles by the Justices of Appeal and High Court Judges, General Officers of the Malawi Defense Force, Grade A and B under the Civil Service and Malawi Electoral Commission Commissioners in line with their condition of service. Civil Service and Malawi Electoral Commission Commissioners in line with their condition of service. This is in addition to Cabinet Ministers and members of parliament who have privileges to buy duty free vehicles every 5 years.
The proposal of duty free week of goods less that USD3000 will only benefit the rich.
The duty free importation of building materials for churches and mosques. Churches and mosques are not poor but the members are poor.
The reduction of tax on opaque beer from 30 percent to 10 percent while tax on malt beer will be reduced from 60 percent to 40 percent will not directly have a positive impact to local Malawians.
Centre for Social Concern proposes the removal of free custom duty for elites such as Members of Parliament, Ministers, Judges and all those who already earn high income from the government. This taxation system will, therefore, reduce inequality and poverty in Malawi.
The increase in free tax bracket to closer to food poverty line of mk120,00 and the reduction for rate of tax for citizens receving less than nk200, 000 a day will be in line with the United Nations Development Goals that advocates for leaving no one behind by 2030. CFSC believes that an increase in free tax band will lead to an increase in disposable income. The increased in disposable income will lead to an increased in demand for commodities. In addition, the increased demand for commodities will create more labour that will also lead more people paying taxes.
2.3 Interest Payment
Centre for Social Concern is pleased to note that Public debt interest payments has been projected at MK299.7 billion. This is a drop from MK376 billion in the last budget. An increase in interest payment reduces disposable income for citizens since the government increased taxes. Increase in interest payment also reduces provision of social services to its citizens. CfSC is, therefore, asking the government to put in place practical strategies like using less expensive vehicles by executives, having unnecessary long convoys of government executives as well as reducing unnecessary government executives’ travels. This will reduce expenditure that will lead to reduced borrowing. The continued appetite for borrowing by government is negatively impacting poor Malawians. They are to pay for it let it be in short term or in a long run term.
2.4 Maize Purchases
CFSC has noted that the proposal in this budget of MK12.0 billion which has increased from MK10 billion by National Food Reserve Agency and ADMARC to restock the Strategic Grain Reserves is a good gesture. While the proposal sounds very good, however, experience has shown that smallholder farmers do not benefit from this allocation due to inability by ADMARC to buy maize from smallholder farmers. Center for Social Concern has noted with regrets that smallholder farmers in Southern Region and Central Region are selling maize below farm gate price at MK100.00/kg instead of MK150/kg. CFSC recommends that the government must ensure that farmers are not being exploited. This money must not benefit selected few Malawians.
2.5 Management of Debt
It has been observed with concern that amount of public debt is increasing every month due to low revenue generation. It has been projected that this year’s deficit is MK718.3 billion. Out of MK718.3 billion it is estimated that MK583.5 billion will be financed by domestic borrowing. Knowing that domestic borrowing burdens citizens through taxes due to high interest rate, CfSC is, therefore, proposing to the Members of Parliament to put strategies that will ensure that the government is controlling expenditure that will result in reduction of unnecessary borrowing.
Conclusion
Centre for Social Concern is, therefore, pleading to Honourable Members of Parliament to holistically scrutinize the budget with majority of poor people in mind with an aim of ensuring that the attainment of United Nations Sustainable Development Goals and our own blueprint of Malawi agenda 2063. The budget should aim at empowering and uplifting those who are in abject poverty and not simply favour the upper class the high income earners!
LILONGWE-(MaraviPost)-Finance Minister Felix Mlusu on Friday, May 28, 2021 presented a MK1.9 trillion Malawi’s national budget for 2021/2022 which many locals are excited with introduction of free week duty.
Fryson Chodzi, one of the country’s social commentator unpacks what is inside the said free week duty that Malawians not be too excited.
Chodzi EXPLAINS: Before you get too much excited, the proposal is about a duty free week and not tax free week! What this means is that for all imports on that week to be gazetted, people will be exempted from paying ‘Duty’ and not other taxes. Maybe there is need for a further explanation and in black and white.
Let’s put this into perspective using a vehicle import as an example.
If you are importing a motor vehicle of not more than 8 years old and not exceeding 1500 cc, you are required to pay the following at compound interest
Duty at 25%
VAT at 16.5%.
In this case the Duty will be 0% and you will still end up paying 16.5% VAT
Second scenario is if the motor vehicle requires exercise. Say you purchase a Mercedes Benz which is older than 8 years and not more than 12 years the following applies
Duty at 25%
Exercise tax for exceeding CC from 1500 to 1999 at 15%
Year Exercise (8 to 12 yrs) at 30%
VAT at 16.5%
In this case its only the duty exempted while you will still pay the Exercize and VAT
In the case of other goods, the duty will be exempted but any other goods that attract VAT you will still be required to pay.
So, please as you are planning to enjoy the ‘duty free week’ plan that you will still have to pay tax for your imports of course slightly lower than normal.
There are grey areas that needs clarification from the Government what this ‘duty free week’ mean because it might only mean groceries.
Let’s hope vehicles are included in this ‘goods’ otherwise we might be in for a shock to realize that sientas and Miras are not part of the goods exempted on the duty free week.
Disclaimer: The views expressed in the article are those of the author not necessarily of The Maravi Post or Editor
Malawi breaking news and World News. News about Malawi, Malawi Business, Malawi Tourism, Malawi Politics, Malawi News, World and Africa Top News.
