All eyes will be fixed on Finance Minister Goodall Gondwe today when he presents the 2018/19 national budget in Parliament.
Malawians are eagerly waiting to know as to how much taxes the local Chancellor of the Exchequer will demand from them between July 2018 and June 2019.
Equally interesting would be how Gondwe will prioritise government spending in light of next year’s tripartite elections.
Gondwe has a tough job of choosing who to impress with the budget among voters, industry and development partners.
Among others, the country’s biggest contributor to the budget, the private sector, is eagerly waiting to hear from Gondwe as to what tax and non-tax measures he will put in place to jump-start the economy.
Huge government arrears, punitive taxes and absence of power has left the country’s industries limping, resulting in their failing to give Capital Hill the desirable amounts of taxes.
In its pre-budget presentation to Treasury, the Malawi Confederation of Chambers of Commerce and Industry (MCCCI) noted that the challenge to declining tax revenues is lack of economic growth as well as lack of tax compliance.
MCCCI, therefore, said tax approach should focus on dealing with these key issues and not increases of taxes.
The Chamber said private sector needs fiscal space to develop such as tax breaks as incentives under specific programmes.
The private sector mouthpiece argued that businesses need incentives to boost their productive capacities, adding that neighbouring countries are discussing reducing taxes such as corporate tax to attract investments in their countries.
“Even developed countries such as USA have reduced their corporate income taxes from 35 percent to 21 percent.
“There is also need to rationalise taxes so that there is level playing field. Make local production attractive than importation of final products. For instance, inputs that attract input taxes where final imported products are tax-free,” MCCCI said.
On its part, the Institute of Chartered Accountants (Icam) said it expects government to control its expenditure by spending based on revenue collected while maintaining equitable collection from taxpayers that is free from harassment and bloated assessment estimates.
“The debt levels should be managed and controls instituted in this area to ensure that borrowing is only for production and investment and not consumption.
“The government should solve the persistent blackouts as they have resulted in lowered production and high cost of production,” Icam said.
Workers, on the other side, would be eagerly waiting to hear from Gondwe as to whether he took heed of appeals from various professional bodies to hike the tax-free band for individuals from the current K30,000 to K50,000 per month to allow them to have more disposable income than is the case at the moment.
Treasury spokesperson, Davis Sado, on Wednesday hinted that the budget will be a balanced financial plan which will take into consideration a number of factors considering the aspirations of the people and the outcomes emerging from the various budget consultations the ministry conducted.
“It has to be noted that it will be a budget which has to encompass the forthcoming electoral processes and the Population and Housing Census. So, the budget has a balanced framework,” Sado said.
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