Members of Parliament question revenue trends

Post was last updated: November 4, 2016

The Budget and Finance Committee of Parliament is questioning how the Malawi Revenue Authority (MRA) has been able to beat its revenue targets in the first quarter of the 2016/2017 financial year at a time when companies and individuals are struggling to make ends meet.

While acknowledging that the trends may be positive to the economy, the committee fears Malawians are being overburdened to meet tax obligations that the government set in the current financial plan which will be largely financed with domestic resources.

The committee’s chairperson, Rhino Chiphiko, disclosed in an exclusive interview with The Daily Times that Parliament had learnt that MRA has beat its own projection for the period spanning July to September, 2016.

But MRA Deputy Director of Corporate Affairs, Steven Kapoloma, has defended the success, saying it has been realised by virtue of the increasing number of compliant taxpayers.

Kapoloma said the regulator has collected K179.7 billion in tax revenues and the collection is against a projected target of K164.5 billion which further implies MRA has surpassed the target by K15.4 billion.

“This excellent performance is due to the implementation of MRA modernisation initiatives under the guidance of the Public Sector Reforms Commission such as the migration to the ASYCUDA World and full implementation of the Electronic Fiscal Devices (EFDs),” Kapoloma said in an emailed response.

ASYCUDA is a computerised customs management system which covers most foreign trade procedures. It handles manifests and customs declarations, accounting procedures, transit and suspense procedures.

According to Kapoloma, full implementation of the system and the Electronic Fiscal Devices is helping to instil discipline in the collection of appropriate taxes.

But Chiphiko maintains that with a tax base that has not seen any significant increase and an economy that is performing badly due to electricity problems, among others, it should be surprising that the revenue collector is beating its targets.

“When you look at the way the economy is performing, you really wonder whether this is not impacting negatively and badly on the citizens when you look at the kind of hostile tax regime that does not take cognisance of the fact that the economy is struggling.

“The tax base has not been increasing and one wonders how MRA has managed to collect the money that it targeted under such very hard economic circumstances. We are worried about the deteriorating standards of our people because we are milking already thin cows,” Chiphiko said.

In the 2016/17 national budget, government projected tax revenues at K719.4 billion and with the revenue trends in the first quarter, MRA is optimistic to collect K539.7 billion in the next nine months.

“For this to materialise, there is need for continuity of tax compliance behaviour among all types of taxpayers; large, medium and small. MRA is always thankful to taxpayers who voluntarily come forward to pay their taxes on time for their compliance. This has been witnessed in the improved collection for the first quarter,” Kapoloma said.

Government is targeting to widen the tax base in the current financial plan by among others removing exemptions and zero ratings on other commodities as part of efforts to restore the integrity of the tax system.

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