Private Sector Calls on Government to Slash VAT and Boost Economic Growth
A resounding call for tax reform took center stage during the final pre-budget consultation meeting for the 2025-2026 National Budget, where private sector stakeholders urged the government to slash the VAT rate to 15% to stimulate consumer spending and revitalize the economy.
The meeting, held at Sunbird Mount Soche in Blantyre, featured a compelling presentation by the Bankers Association of Malawi (BAM), which argued that reducing VAT and removing it entirely from essential items like cooking oil would provide relief to vulnerable groups and spur economic activity.
BAM Chief Executive Officer Lyness Nkungula highlighted the need for tax incentives that promote savings, investments, and digital banking infrastructure. She proposed measures such as tax deductions for interest on savings accounts and incentives for banks that invest in accessible financial services for rural areas.
“Proposing tax breaks for banks investing in digital banking infrastructure will improve access to financial services, particularly in remote areas where traditional banking is limited,” said Nkungula.
Recognizing the role of small and medium enterprises (SMEs) as the backbone of Malawi’s economy, BAM advocated for targeted tax relief to improve access to credit and encourage growth.
“Tax relief for SMEs will empower businesses, boost employment, and stimulate overall economic growth,” Nkungula emphasized.
On inflation control, BAM recommended fast-tracking mega-farms and promoting the use of organic fertilizers to curb food inflation and reduce reliance on costly imported fertilizers.
“Malawi has the capacity to produce fertilizer locally, which would lower costs, increase production, and improve export potential,” Nkungula added.
To boost foreign exchange, BAM urged the government to streamline export procedures and reconsider tax holidays for foreign-owned mining industries. “Taxes for these investors should be in US dollars, not kwacha, to maximize revenue,” she argued.
BAM also flagged government expenditure as a growing concern, urging stricter budget scrutiny for ministries, departments, and agencies.
Finance Minister Simplex Chithyola Banda commended stakeholders for their patriotism and robust input, assuring them that their contributions would shape the upcoming National Budget.
“The government values your participation and will continue to engage captains of the economy and all Malawians in shaping a prosperous economic future,” he said.
As the nation awaits the 2025-2026 budget, the private sector’s bold proposals could pave the way for a more inclusive and vibrant economy. The ball is now in the government’s court to translate these recommendations into action.
Follow and Subscribe Nyasa TV :