Malawians want an inclusive budget

Sosten Gwengwe, Minister of Finance and Economic Affairs

Malawians have asked government to come up with a budget that contains tax cuts to allow the people to have disposable income.

The call came as Ministry of Finance solicited views to be included in the national budget.

Levison Muyamba, speaking on his own behalf said he understood the government is facing a lot of pressure to have an all inclusive budget but pleaded that the economic environment is harsh and the little people get is not enough.

Muyamba among others asked for the revision of the tax band to K250,000 from K100,000, sentiments which were received with a sense of uniformity across the floor from stakeholders.

Julius Manda, another contributor said the money that goes into the Affordable Input Programme (AIP) should be diverted to farmers who can produce at a large scale as these can ably supply the country with the much needed staple crop and avoid issues of repeated hunger.

Malawi Chambers of Confederation of Commence and Industry (MCCCI)'s Chancellor Kaferapanjira presented a  detailed call from the private and business sector which among others went for the removal of 16.5 percent VAT on non-banking services charged to users of services such as ATMs to support the digital banking drive, reduction to 30 percent excise tax on alcoholic beverages in plastic bottles with Alcohol by Volume (ABV) of 15 percent.

MCCCI also proposed tax incentives to manufacturing and processing industries that use a substantial portion of local inputs in their production in order to grant their products a competitive advantage over products imported into the country, as well as save forex.

It further said there is need to remove 3 percent withholding tax requirement on subsistence farmers with low volumes supplying to companies who would ordinarily not fall under the tax threshold.

It went on to propose that government must strengthen investment in railways to bring down the transportation cost,  encourage and promote use of rail transport to ferry key commodities such as fuel and fertilizer and continue the expansion drive in the road sub-sector.

On the foreign exchange situation, it proposed a ban on importation of motor vehicles older than 10 years as they consume a lot of spare parts, which are among top 10 imports, develop a medium term (say 5 year) strategy for developing the textile and garment industry.

It also suggested a move towards banning of importation of secondhand clothes, which rank among the top ten imports as well, incentivize local production of fertilizers and cooking oil to reduce imports, disincentivise importation of vegetables to encourage local production and allow the Kwacha exchange rate to be more market aligned to disincentivise unnecessary imports whilst incentivising exports.

Ministry of Finance said tax cuts take time for people to see the benefits but took the proposals into consideration.

Sosten Gwengwe said the biggest challenge to Malawi's economy is the gap between public debt and budget funding.

 "How can we reduce our national budget deficits so that to we cannot rely on borrowing but we can fund our budget? The national budget must try to be balanced; devaluation, inflation have affected not only civil servants but the entire population.”

Another question the minister asked the stakeholders was: "Can government collect more; from where? We just look at expenditure and not revenue but we will create a deep hole that will haunt the youth. We need to look beyond the fiscal year, beyond elections."

Gwengwe said government will ensure that the budget is in all practical sense aligned to the Malawi 2063 and its first 10-year implementation plan targeting the quick wins especially in the economic sectors that can generate wealth, create jobs.