2021/22 Malawi fiscal budget walks Chilima’s duty-free week campaign talk

Minister of Finance, Felix Mlusu, on Friday afternoon presented his budget for the 2021/2022 fiscal year, and one of the items that Malawians have so far been excited about is that beginning this financial year taxpayers will be allowed to import goods of no more than US$3 000 duty free.

The budget is Mlusu’s second budget after his first—2020/2021—was marred by huge deficits in revenue collection as a result of the Covid-19 pandemic.

Talk about a duty-free week was first mentioned by UTM Party president, Saulos Chilima [now State Vice President] in May 2019 a few days prior to that year’s tripartite elections.

Minister of Finance Felix Mlusu presenti national budget in Parliament on Friday .-Photo by Govati Nyirenda, Mana

Making his presentation, which took him over an hour, Mlusu—a tried and tested economist from the private sector—said “duty free week will be introduced in this year’s budget.”

According to Mlusu, “tax payers will import duty free goods of no more that US$3 000 a year” to give an opportunity to have some freedom to import.

He said dates for the duty-free week “will be gazetted later” in the financial year so that every willing Malawian benefits.

Chilima duty-free promise

Even before UTM had amalgamated with ten other parties to form the Tonse Alliance so they could dislodge former governing Democratic Progressive Party (DPP), Chilima had said his UTM led government would allow businesspersons import unlimited amounts of goods without paying tax for a week.

He had, however, said the opportunity will only be available to people who pay taxes and have a tax clearance certificate from the Malawi Revenue Authority (MRA).

“For one week, every year people who have an MRA certificate will be allowed to import goods for free. If all goes well, there will be two duty free weeks every year,” Nyasa Times had recorded him saying at a campaign rally in Blantyre.

According to Chilima then, there was a need to reform the tax regime in Malawi in order to uplift companies that manufactured goods in the country.

For instance, he had said the UTM government would remove value added tax (VAT) on water, electricity and airtime as well as a promise to remove water and electricity connection fees.

Apparently, Mlusu also announced that the government had “scrapped off” the K17 500 water connection fees.

Economists cautious

Commenting on the budget, Economists Association of Malawi (ECAMA) president, Loreen Nyasulu, said the budget had some good as well as some worrisome items within it.

Nyasulu said it was worrisome, for example, that a whole fifty-percent of the budget was committed to the Affordable Input Programme (AIP).

On taxes, she said the budget “has some incentives it can afford, and others it cannot.”

She said: “We are just coming from a fiscal year in which it was difficult to collect enough revenue. The budget needed to be very careful in the way it handles tax affairs.”

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