Malawi 2013/14 budget analysis: Open letter to Minister of Finance Lipenga
As a faithful tax payer of this Malawi nation, I take this simple opportunity honorable minister to congratulate you on the successful presentation of the national budget for 2013/14 to the tune of MK604.4 billion from 460.9 billion in the 2012/13 budget. It was a nicely crafted speech displaying your total control of the pulse you have handled for the past 3 budget sessions.
Despite some silent shortfalls of overspending, illegal borrowing, bad investments, tense relationships with donor community and debts, I want to say there is every hope that you will deliver again with this budget.
Honorable sir, I will not take much of your time to analyze the budget vote by vote but as an abiding tax paying citizens of which I have just come to understand that my income is shared on 50/50 on both VAT and PAYE and other taxes with government, I write to highlight the most crucial points that need refining in the budget.
Honorable minister, you are quite aware that poverty in Malawi is so serious and widespread. Households with high poverty are, on average, larger, female-headed, and have high effective dependency ratios. It is with this background that just like in 2012/13 budget when you made a commitment to focus on medium term to deliver a conducive environment for economic growth and poverty alleviation so that all Malawians can reach their full human potential, I remind you to the very poor people of this nation are catered for and accommodated in this national budget.
Under P.A.Y.E honorable minister you have said that as a mitigating measure, government has increased the 0 percent threshold for P.A.Y.E from MK15, 000.00 to MK20,000 and the next MK5000 will be taxed at 15%. I don’t know Mr. Minister if you have come to consider the impact of devaluation on the MK20,000.00 from MK15,000.00. you will understand that it has just remained an amount that will be equal to MK10,000.00 and basically the very sons and daughter of this republic are begging employers to atleast make this a minimum wage value. On such a minimum wage value honorable minister, do we really need to charge P.A.Y.E?
In the 2012/2013 budget honorable minister, you indicated government removal of VAT on newspapers and internet services. You said in your own words honorable minister that ‘this is to allow Malawians access information at affordable price. I stand amazed that you have reintroduced VAT on internet you said to allow internet service provider claim input VAT, and you say this will in turn reduce costs? What do you mean honorable Minister? In my understanding, this will push the already high prices up again. I would suggest therefore Sir, that you remove VAT on all imported computers promote ICT in the country and perhaps stick to your plan of VAT on internet, but punishing technology users twice is quite unfair.
Agriculture is the life blood of for the majority of our people and its development will never remain mere rhetoric and vote generating item. I am impressed that this government will boost crop and livestock production by removing some taxes on it. I will however propose that our food reserve agency be strengthened that we do not run into another panic of hunger in the country. You served in Dr. Bingu wa Mutharika government together with the current president. I am therefore made to believe that you share in the vision that no child in Malawi shall die because of hunger. I therefore urge that never again should this country go and beg for food when we can strengthen and introduce more irrigation practices and diversification. Time is now sir that we can start full diversification to legumes and other crops away from tobacco.
I would like to stress that and ask that there should never be a repeat of drug shortarge in our hospital, just like no mother should die while giving birth, no child of this country should die for lack of drugs in the country and in our hospitals.
With regard to growth and job creation; I am not too happy to see that no policy is in place to make sure that we create more local jobs for our graduating young people. It will be my wish to know how many jobs this government aims to create in this financial year and what policies are there.
In this first series of letters to your office to your office sir, I ask for a proper breakdown of some items like income tax in the following order; company income tax, PAYE, withholding and others, mineral loyalty like that of kayelekera, VAT of domestic and import; custom duty, excise duty and fuel levy; non tax revenues like fees and fines, dividends and on lending; domestic borrowing, grants and foreign loans. You might have noticed that deliberately you have hidden some figures like on domestic borrowing. You are quite aware that in another budget (I think of zero deficit) you authorized borrowing some money from reserve bank of which we do not want a repeat of it.
Lastly honorable minister, do you kind explaining to us why it is hard control external travels and failure by some offices and ministries to be prudent in their spending? Again honorable minister, why are we being mean with figures in our budgets, is there anything we tend to hide?
I would therefore like to wish you well in your last term as minister of finance and hope to see you again after elections next year. You may not respond to me directly to my open letter but children of this country deserve answers to these few observations. I will keep writing mails to your office knowing that you are fascinating and a hard worker.
*True son of Malawi: Emmanuel Mwale
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