Malawi Govt plays down calls to reduce tax on second hand vehicle importation

Newly appointed deputy minister of finance Dr Cornelius Mwalwanda has played down calls to reduce taxes on the importation of second hand vehicles saying the practice drains government’s scare forex reserves.

Malawi has dismal foreign reserves because of perpetually huge trade deficit as it has few products and services the world wants.

“Of course vehicles are important but why can’t you import things machinery for instance that can help you to engage in small scale mining for example. Private sector should drive exports so that Malawi trade imbalance is solved. That is why as government we trying to improve incentives for exporters,” Mwalwand said.

He said this in his presentation at the second 2013/14 pre-budget held at Mzuzu Hotel on Wednesday.

Dr Cornelius Mwalwanda : Not keen
Dr Cornelius Mwalwanda : Consultation of the forthcoming budget

Deputy Minister of Finance presided over the deliberations which drew members of the business community, academia, statutory bodies, government departments and the media.

Earlier the Evangelical Association of Malawi (EAM) a grouping of 58 churches and 50 Christian denominations in Malawi, its presentation proposed to the Malawi government to revise the country’s tax regime to allow participation of more indigenous entrepreneurs in the economic activities.

“For example, tax on second-hand cars is unreasonable. We are not saying that you should scrap it off, but that you should reduce it. The duty should not be too punitive as it is at the moment This will even help to reduce corruption,” said EAM Commissioner for Ethics, Justice and Peace Reverend Major Makuni Gondwe.

The style government uses to collect revenue was not spared either. Gondwe suggested that ticketing system should be used just like the way it is done in other countries.

“Use ticketing system whereby money would be going direct to government. The current system where an official collects money is tempting and could easily result in corruption,” he said.

EAM also said the reduction should also apply to some none tax revenue like road traffic fine to encourage voluntary payments.

“We also recommend the introduction of the ticketing system like in other countries so that the money be deposited in designated government accounts rather than giving it to officers as most of it might go into their pockets,” he said.

Government is expected to present the 2013/14 budget during the next sitting of Parliament in May.

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