An accountants body has asked the government to remove value added tax on essential goods and services to increase income disposal for the majority poor.
Institute for Chartered Accountants of Malawi (Icam) said this on Friday in Blantyre during pre-budget consultative meeting in the commercial city.
Minister of Finance, Economic Planning and Development Joseph Mwanamvekha and his budget team are seeking input from the public on what should be included in the 2019/20 National Budget set to be tabled in Parliament in September.
Currently, the country is running on a provisional budget of K511 billion covering four months from July to October. Treasury pushed through Parliament a provisional budget to ensure continuity of government business after the budgeting process was disrupted by the May 21 Tripartite Elections.
Icam president Dr. Frank Gondwe said the removal of value added tax on piped water, electricity, bread and communication would increase the disposable income for the poor.
Ironically, UTM president Saulos Chilima campaigned in the run up to the elections on the removal of value added tax on water, electricity and airtime.
Gondwe also asked the government to increase the pay as you earn band from the current K35, 000 to K200, 000.
In her presentation titled Insights from Civil Society Organisations (CSOs), the Malawi Economic Justice Network (Mejn) executive director Grace Kumchulesi said imposing VAT on such ‘basic needs’, is as good as government contracting its own efforts to provide safe water and ensuring that more Malawians have access to electricity.
Mwanamvekha said the government will look into the issues raised, saying there was need to balance things as the matters Icam had raised involved removal of some taxes.
He said the next budget will hinge on promoting both domestic and foreign investments while strengthening prudent fiscal discipline.