Taxes and more in Malawi, give us a break

The Daily Times reported a heartrending story of a woman who lost her child at Rumphi District Hospital because no health worker was available to attend to her as she bled while she gave birth. No health worker was available, mind, because the government is no longer paying them their locum.

And the government is no longer paying health workers their locum because it is broke.But while the woman was nursing her private grief in Rumphi, the government was banging heads with donors, health rights activists and civil society organisations in Lilongwe on the reforms it has proposed which it hopes would move mountains in the health sector.

Among other suggestions, government proposes to increase funding to the health sector by introducing a raft of taxes and levies including health-risk taxes on alcohol and cigarettes, health value added tax, corporate health tax, airtime health levy and fuel health levy.

They are all creative taxes, which, in the view of Eugene Nyarko, country director for the World Health Organisation, are used by some governments the world over to good effect in the health sector—except that Malawi is not the other governments.

It should only be in Malawi where its citizens hand over half of their earnings to the government in taxes—such as pay as you earn, value added tax and numerous levies—but receive next to no service at the end of the day. There is, for instance, the so-called rural electrification levy on both fuel and electricity; the irony of the matter, however, is that we don’t produce enough electricity to go around. So, we are essentially investing in our dreams.

Sadder still, Malawi’s inflation is so high that the same overtaxed people’s earnings are losing value even before they hit their bank accounts. But these are the people we want to burden with more creative taxes and levies.

Besides that, Malawi currently has an economic environment so bad and so volatile that companies are downsizing or closing as if they are competing and many—perhaps with the exception of banks—are struggling to meet their corporate tax obligations which are way out of this world.

But, according to this proposal, they would have to happily shoulder an extra one to three percent in corporate health taxes. Where they are expected to find those resources—if not to push the cost to the same overtaxed citizens—I have no idea.

And it beggars belief to imagine someone sat down and thought: “Malawi has the unwanted record of having the highest call rates in the world. What could get worse than this? Let’s tax airtime some more!”

Of course, any government that respects its fiduciary duty to its citizens would easily get away with such creative taxation; sadly, the Malawi government does not. Because if it won’t be siphoned off by an underpaid-but-overtaxed civil servant, you can rest assured it will be used for buying fuel-guzzling top-of-the-range vehicles which will serve no purpose to the health sector. That fear is not paranoia; it is real.

Where I would agree with Nyarko is where she suggests “government needs to look at more creative ways of banning or reducing illicit tax evasions.” But would it?

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