Goodall Gondwe, the Finance Minister, has said in his budget statement that Malawi Revenue Authority (MRA) is expected to collect K748 billion in order to finance the 2016/17 budget and that the nation should expect rise in taxes.
Gondwe said like in other SADC countries much emphasis is in Value Added Tax and Malawi government has also put VAT on anything one is going to buy including soap.
According to Gondwe things like soap now have 16.5 VAT.
Gondwe said the budget will get 80 percent of support from locally mobilized revenue.
“Tax revenue is expected to rise as the MRA is to collect K748 billion against the proposed target of K698 billion suggested by them,” said Gondwe.
The Finance Minister added that government is to set standard tax on goods that were tax free in the country as one way of helping MRA to meet the target.
Presenting his budget, Gondwe said total revenue and grants during the 2016/17 fiscal year are estimated atK965.2 billion or 22.2 percent of nominal GDP.
“Of this amount, some K708.8billion will be tax revenue, K66.0 billion will be non-tax revenue,while K190.4billion will be grants from our cooperating partners,” said Gondwe.
“ Thus, MK774.8 billion or 80.3 percent of these resources will be domestically generated, while the remaining 19.7 percent will represent donor grants”.
He said c ompared with the 2015/16 revised budget, tax revenues are projected to increase by 21.8 percent, reflecting the fact that nominal GDP, which is the base for most of the taxes, will grow by 24.0 percent.
“Tax on income and profits will account for 55.4 percent of total tax revenue, while tax on goods and services will generate 37.2 percent.
“On the other hand, non-tax revenue is shown to be lower relative to the 2015/16 revised budget estimate of K71.9 billion, because the 2016/17 figure excludes the rural electrification levy which funds MAREP, estimated at K13.5 billion in 2015/16.”
Moreover, Gondwe said it is projected that 42 the benefits of the anticipated implementation of the newly formulated Dividend and Surplus Policy will occur with a lag
“The key non-tax revenue sources will be fuel levies, parastatal dividends and departmental receipts,” he said.
Malawi is expected to use K1.2 trillion in the 2016/17 fiscal year with the largest share going to the agriculture ministry followed by ministry of education.Follow and Subscribe Nyasa TV :