Malawi govt urged to cut VAT on water, bread: Mwanamvekha for pro-poor, growth budget

Minister of Finance and Economic Planning Joseph Mwanamvekha says he expects  the 2019-2020 budget to be presented in parliament when  this Setember to be pro-poor and pro
growth as economists and stakeholders have asked government to cut value added tax (VAT) on bread and  utilities such as piped water and  electricity.

Speaking during the close of pre-budget consultative meeting in Lilongwe, Mwanamvekha said it is possible to have a pro-poor budget because the country has the capacity to grow its economy considerably.

“ It is pleasing that many have contributed during today’s deliberations. We will take on board  most of the suggestions that you have made because they are invaluable. What I wish most is that this year’s budget is pro poor and pro-growth because that is achievable,” said the country’s purse keeper.

According to Mwanamvekha,  the country needs to ride on the economic stability that has already been created and that the terrain of growth has considerably been changed and the country is on the right track.

He, however,  bemoaned the high unemployment rate in the country,  saying many young men are doing jobs not suited to their qualifications.

“I always feel sad to see many of our young people being turned into bus loaders. There is need to find a lasting solution for this problem. We also need to empower women by having a growth based budget. We need to allocate resources not only for consumption but
development  as well.”

In his presentation, Economics Association of Malawi  president Chikumbutso Kalilombe urged government to deal with the problem of smuggling, saying it is affecting local companies negatively.

Kalilombe also said there was need for government to work with companies on issues to do with taxation saying it is important to tax profits only rather than the production costs as is the case now as this tendency chokes companies.

“There is need to look at the issues of smuggling seriously and those involved in this malpractice must face stiff punishment. Even traders selling smuggled goods must be punished as well,” he added.

He further asked: “ We also want government to consider  tax rate reduction on Paye, VAT and corporate tax whle  ensuring that non-tax revenue base is expanded.”

Replying to Kalilombe,  Minister Mwanamvekha said that government will work hard
to increase patrols in the borders to deal with the problem of smuggling.

He also said government has taken note of all suggestions but it would be difficult for his ministry to accommodate them all at once.

Executive Director of Malawi Economic Justice Network (MEJN)  Grace Kunchulesi who represented all the non-governmental organizations, urged government to consider introducing automated ways of collecting market and vehicle parking  fees and increase vote going towards nutrition among others.

She also suggested that government must enhance child protection programs and increase allocations to nutrition as well as women.

Kunchulesi suggested. “We could love as Civil Society if the tax free bracket could have been increased to K80,000 and that VAT on commodities such as water, bread and even energy be scrapped off to help Malawians.

“Severance pay should also not be taxed because the workers must have already been paying taxes in one form or the other.”

The pre budget meetings will see Mwanamvekha and his team travelling to Mzuzu and Blantyre to collects ideas and suggestions from various stakeholders to be incorporated in the budget.