Malawi MPs against inheritance tax: ‘Leave the dead to rest in peace’
Members of Parliament spoke against taxing an estate after death, saying it is unfair, and called on government to leave the dead to rest in peace.
MPs spoke against people paying death duty when contributing to the Estates Duty (Amendment) Bill in Parliament tabled by Minister of Finance, Economic Planning and Development Goodall Gondwe.
Most MPs described estates duty as legalised property grabbing and appealed for its abolishment.
People’s Party (PP) spokesperson on legal affairs Ralph Mhone said the revised threshold did not take into account the tax contribution.
Zomba Malosa MP, Roy Kachale Banda (PP) said he was “totally against any inheritance tax in any form or fashion.”
He said: “The reason I am against it is because of one question. Who are we taxing? Are we taxing the deceased or are we taxing the survivors? If we are taxing the deceased… the assumption is that taxes have already been paid on this property. For example, if a person builds a house, we assume that the person is building that house using money from business, which has already been taxed using income tax or from employment emoluments, which have already been taxed using Pay As You Earn.
“So, we must also then consider the amount of tax that we are going to charge on that estate duty. Now if we are taxing the survivors, sometimes the survivors are minors who are incapable of paying tax in this country. “
Malawi Congress Party (MCP) MP for Dowa East, Richard Chimwendo Banda called on government to “completely abolish taxes of people that have died in this country. “
He said: “I do not see the reason why government should still follow people after they have died and maybe they are the only bread winners in the house. At the end of the day, it is the family and the children that are going to suffer. I don’t know why government wants to collect taxes from people that are dead. “
In her contributions, United Democratic Front (UDF) MP for Mangochi South, Lilian Patel asked the Minister of Finance to link the bill to inheritance.
“What is happening now when a person dies and leaves a house to his children, is that before the Administrator General administers the estate, he assesses the value of the estate and asks the beneficiaries of this estate to pay tax before the estate is administered.
“As a result, if you as a parent dies and leave a house to your school going children, they will have nowhere to stay; and because the tax man has followed you all the way to the grave, they end up selling that house which they were staying in, to give the money to the Administrator General to administer the estate,” said Patel.
She added: “Minister of Finance, please can you find a way. I know we have to pay taxes. You pay taxes from the first day you start working. All your life you are paying taxes. You try to get property for your kids, but the tax man still follows you to the grave and the kids suffer. “
PP ‘s MP for Mangochi Monkey Bay , Ralph Jooma asserted that tax “has to be convenient.”
“You have to be able to take away something that you have made to pay government. Now if you just inherit a house, where do you get that money that government is requesting for when you have just inherited and staying in that very house?.
“Mr Speaker, Sir, I think there is an element of double taxation. In all ways there is an element of double taxation and the best we can do is to abolish completely the estate duty tax in this country,” Jooma said.
Adding his voice to the contributions, Frank Mwenifumbo an Independent MP for Karonga Central said it is “a very unfair bill” to the general welfare of the citizenry of this country.
“We are rated as one of the poorest countries in the world and as such, what it means is that very few families can afford to earn enough money or income to build properties such as houses.
“And, if we can be honest with ourselves, Mr Speaker, Sir, on average, very few Malawians own property as it was reflected by the Minister of Gender, Children, Disability and Social Welfare when she encouraged women that they should own properties. In Malawi, very few women own property,” said Mwenefumbo.
He said the Estate taxws tends to stifle the very efforts by government to make sure that as many women as possible have property.
However, Minister of Justice and Constitutional Affairs Samuel Tembenu clarified that the government was not imposing tax, but complimenting the Deceased Estates, Wills and Inheritance Act.
“What we have here are just consequential amendments following the passage of that Act and actually they are meant to compliment what was done after that passage. Therefore, the purpose of this bill is not to impose new taxes as it were but to compliment what was done, so that that Act is properly implemented,” said Tembenu
Tembenu said views by the MPs would be properly placed when government brings in a bill to either revise the Estate Duty Act completely as an overhaul .
But Dedza South West MP Clement Mlombwa (MCP) said the bill is trying to empower the government through the Administrator General to grab the deceased property, saying Malawians are already heavily taxed.
“This is one of the legislations that this House should not allow to become part of the laws of this land. We should think of the people we have left in our homes that they can hardly afford this. In other words, when I die my relations will not afford to pay that particular tax that will be accrued on my property,” he said.
Finance Minister Gondwe explained that historically, estate duty did not originate in Malawi.
“Estate duty like most taxes, originated elsewhere and one reason why these estate duties were conceived, is a fact that there was particularly in England, a time when there was gross income inequalities where some people died with huge wealth and others died as paupers. And at that time, there was an enormous amount that had to be done in England and there was hardly any revenue at all. So what was done was to look at how the government could raise resources to make up for the requirements of budgets,” said Gondwe.
Gondwe said time will come “to look at the totality of our taxes in the country and see whether what we require or the tax system that we have is appropriate in terms of the amounts that it generates. “
He informed the House that the procedure for assessment of estate duty was that the rates and threshold value were too low.
“Currently, estates duty is levied on property whose value is in excess of K30 000. In light of the depreciation of the Malawi kwacha, the value of the estates duty has been eroded. People who ordinarily would have not paid estates duty are doing so and estates duty has become exorbitant,” said Gondwe.
The Finance Minister warned that abolishing the duty would mean the government would have to find other sources of revenue in place of the duty.
Parliament approved the revision of the threshold at which estate duty is paid from K30 000 ($51.07) to K5 million ($8,512.09) in keeping with the devaluation of the currency.
This means that Malawians will now be paying the 10 percent estates duty on the value of property exceeding K5 million ($8,512.09).
The bill was eventually passed with a minor amendment on the schedules.
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A goodal mwatha nzeru mukufunabe kuwakama aMalawi osauka inu musakukhoma nsonkho olo ndi 1% yomwe zMawa mudzidzati tasauka pambuyo pa zaka zina 50? Apatu palibe nzeru!!
I am thinking the this report leaves a lot to be desired. It’s almost pathetic. There is no substance as to “educating” readers regarding the salient points in the current law. The internet literati are very interested because many have real estate, and other property, they would like to be inherited by specific people. Wanga Gwede, please re-visit this subject and tell us, even in point form, what they law says and the counterpoints as currently proposed by Minister Gondwe. You can see the comments are just meandering through the whole issue. Just a few pointers:- Is the law about… Read more »
Another area of concern is the pension scheme. While working one is deducted 30% PAYE. After retiring govt gets another 30% from the same money that was already taxed. Is this not robbery?
From your salary govt gets 30% PAYE. Buy anything from the shop, 17.5% vat. 30+17.5=47.5% to govt. Is this not robbery?
DZIKO NGATI LAKUKANIKANI KUYENDETSA, PATSANI ENA AYENDETSEKO CHIFUKWA ANTHU AMENE AKUVUTIKA NDI AKUMUDZI PAMENE INU MUKUCGITA KUSANKHA CHAKUDYA, MA ALLOWANCE KUPATSA NDI GALU WOLONDERA PANYUMBA PANU AMENE
MIMBA ZANU NONSE ANTHU OPENGA KWAMBIRI
ZIMENEZO NDIYE ZOPUSA KODI MUFUNA MISONKHO INGATI? ANTHU CHISAUKIRENICHO INU NKUMAFUNA MISONKHO PA CHILICHONSE, KODI CHIFUKWA INU MA MP SIMUDULIDWA MISONKHO? MUSAIWALE MUNALEMBEDWA NTCHITO NDI A MALAWI NDIPO KUKUCHOTSANI NKOSAVUTA ASK JOYCE BANDA, TIZAONANA 2019 ZIPANGANI MAGANIZO ANU WOPUSAWO SHUPITI
The issue here is abolishment and not revision. Munthu akamwalira asamalipire msonkho. You who are calling those seeking clarification as being below par should feel ashamed because inu mukufotokodza zabodza dzosagwirizana.
so sad
In uk for example You pay inheritance tax only when you sell the property which you have inherited, say a house. If you decide to live in it or rent it out( you pay normal tax on rental income) you don’t pay inheritance tax but when you decide to sell it, then once sold, the govt takes its share of inheritance tax. Again there are threshold value limits, for example you don’t pay if your house realized on the market a value below the threshold value. Similarly with investment stock market shares someone inherits. By the way inheritance tax can… Read more »
No such word as ‘abolishment’; should be ‘abolition’. If writing English. please make sure to use the correct words. As regards inheritance tax, this is a means of distributing wealth fairly instead of leaving it in the hands of a small minority. Of course MPs are against it; they are some of the wealthy minority.