Civil Servants Trade Union (CSTU) president Eliah Kamphinda-Banda has called on government to stop providing tax holiday to foreign investors, arguing the provision has turned Malawians into tax slaves.
However, Kamphinda-Banda said it’s not strange for government to heavily tax civil servants’ salaries, which were hiked by 61 percent a month ago after a week-long industrial sit-it.
In an exclusive interview with Nyasa Times, Kamphinda-Banda said Malawian workers are forced to shoulder a tax burden despite most of them being paid ‘peanuts’ because of undersized tax-base.
“It is not strange for government to heavily tax our recent hiked salaries because our tax-base is small, and there are no new jobs created or manufacturing companies opening to widen the base. Its same workers who shoulder the tax-burden every time, Malawians are tax slaves,” Kamphinda-Banda said.
He then described the country’s tax laws as weak, which tend to favour foreign investors through provisions like tax-holiday, citing the case of Paladin Africa at Kayelekera mining, currently enjoying a 15-year tax holiday, as classic example.
“Government is losing out alot on foreign investors who take advantage of tax holiday. Most of them close their companies once the tax holiday is over, meaning there is nothing paid despite all profits they make through out the years. We need to remove that provision and ease the tax pressure on local workers”.
If the tax holiday provision is removed, the CSTU president said would allow workers to pay less tax than are remitting currently, and urged government to come up with initiatives to widen the tax base.
However, government has said it will only reconsider calls to remove tax holidays for foreign investors if such proposals are made official.
Minister of Finance Ken Lipenga said: “It is difficult to comment on such issues unless a proposal is submitted to us. But, I can assure you that government will seriously look into that once a proposal is made”.
Lipenga said soon government will embark in consultative meetings with various stakeholders seeking input on next year’s national budget and that any proposal on tax reforms including removing tax holiday will be carefully ‘looked into’.
There have been complaints from civil servants on how government is taxing their salaries, arguing the recent pay hike has been swallowed up by heavy taxes.
Meanwhile, Kamphinda-Banda said things will improve come July when government starts restructuring civil servants’ salaries.
“This month we were given K5.7 billion which is less than normal monthly wage bill of K7.2 billion, meaning the pay hike couldn’t be effective as expected; but we accepted it knowing by July, we will be reviewing salaries and all concerns will be addressed”.
During the July salary structuring government is expected to among other things harmonize civil service salary structure as well effect the proper order on recent 61 percent salary hike.
The salary hike has pushed government’s wage bill from current K92 billion to K276 billion. There are 1097,000 workers in the civil service.Follow and Subscribe Nyasa TV :