Balaka South MP, George Nnesa has told parliament that Malawi should find itself a way of weaning from donor flows which are significant in the budget up to 40 percent.
In his contribution to the budget statement presented by Minister of Finance Ken Lipenga, upfront Nnesa said Malawi needs to find ways of getting away from depending on outside support as bilateral donors are experiencing difficulties in their own countries.
“Mr. Speaker, Sir, our budget has got an element of 40 per cent that will be supported by donors. Every year the State-of-the-Nation Address and the Budget Statements have clauses like ‘we are grateful to the donors’, ‘we should be thankful with the support that our development partners are giving us,” noted Nnesa.
The lawmaker stressed that the country needs to migrate from the current aid dependency.
“Mr. Speaker, Sir, as a head of family, if you are going to call the whole family and say let’s be grateful to our neighbours for providing Nsima, it is a big shame because it means as a head, you are not able to provide. In this area, Mr Speaker Sir, I am not very proud to be a Malawian,” he said.
“As a Malawian, I am not happy that we are perpetually being thankful to the donors; we need to be making cautious efforts to wean ourselves from the support of the donors.”
Commenting on substation issues in the financial plan, Nnesa observed that whilst there have been tax cuts to assist the poor, these have been “very cosmetic”, saying they will have very little impact.
“How many people in the villages do use matches and how many of them have got access to shuttle buses? These are the areas that some of the tax cuts have been,” he noted.
“However, the increase from the tax free bracket to K20,000 only gives a relief of K750 for anyone that is earning K25,000 per month. This will be equivalent to probably a bus fare for two days for those that are able to take buses to work.
“Mr. Speaker, Sir, the budget needs to show that the government really feels for the poor people. I do applaud the government for the reduction in the duty on the bicycles and the motor bikes because these are basic modes of transport in the villages. But we should not politicise issues to do with tax because I am aware of that the PP-led government is about to order thousands of bicycles and motor bikes from China for the campaign. I hope this reduction has nothing to do with that,” said Nnesa who is also president of Mafunde party.
“Mr. Speaker, Sir, the 15 per cent tax bracket has been left at K5,000 this is too narrow looking at the current prices. I would have recommended that, that be extended to, probably another K15,000.
“From the current figures, Malawi Revenue Authority (MRA) is collecting a lot from the pay as you earn. I would also have expected the government to introduce a higher tax bracket of 40 per cent for those earning K500,000 and above per month. At that bracket the marginal rate of utility for the higher bracket people is very little and the effective loss to them will not be much.”
Nnesa also proposed that companies that are making perpetual losses should be forensically audited by Malawi Revenue Authority.
“For example, I cannot believe that Kayelekela Uranium Mine has been making losses for a long time. International companies take advantage of our loopholes in the laws to rip off developing countries. Government should have insisted that all revenues that are coming from the sale of the uranium should come into a local bank account. In that way, we would be able to monitor what is going on,” he said.
He also criticised Minister of Finance on his statement that the government will be borrowing K42 billion from outside to meet the deficit plus payback the K7.2 billion domestic debt.
“Borrowing from externally to meet local debts does not change anything. We are simply removing the debt from one pocket to the other, the net is the same. This is mere window dressing of the debt. That rate is also exposing us to fluctuations in the foreign exchange and it creates a bigger burden to our people,” Nnesa said.
He also said the country should do away with subsidies.
“I have been an advocate of removal of subsidies where it is not necessary because that is creating perpetual dependency of the people. However, with high unemployment, low salaries and wages, low productivity and higher fertility rate, it will be difficult to achieve this. The government needs to address the latter to ensure that the citizens can stand on their own,” he said.
“With the Fertiliser Input Subsidy Programme (FISP) budget going up every year, I do not see that there is a will from the will from the government to address the subsidy burden. The government has just added another subsidy programme that is the K20,000 for the chiefs; they need to walk the talk.”
Nnesa said he “sympathise a lot” with the Minister of Finance “as it is very difficult for him to craft an economically sensible budget when elections are around the corner. “
He said: “ Even on this side of the House we are handicapped to shoot down some areas that do not make economic sense but do make political mileage. This includes the FISP of course as the Minister is saying, the elevation of chiefs, the Mudzi Transformation Fund and others.
“Mr. Speaker, Sir, as an election budget, it has many unexplained increases in areas that my colleagues have commented on. These include the local travel, State Houses, the FISP and others. But the government should be aware that this will be the budget that the voters will have in mind when they go to the polls next year.”Follow and Subscribe Nyasa TV :