Non-tax revenue collection decline

Post was last updated: March 1, 2016

Malawi government has failed to hit its projected target for non-tax revenue for the first half of the year during which only K28.2 billion was collected against a target of K34.95 billion, representing a decline of 21.2 percent.

Minister of Finance and Economic Planning, Goodall Gondwe, said in his budget review report presented to Parliament on Friday that the underperformance was due to non-remittance of parastatal dividends and proceeds from the rural electrification levy in the order of K7.1 billion and K1.3 billion respectively.

He said dividends collection in the period under review amounted to only K3.1 billion against a projection of K10.2 billion.

According to the comprehensive mid-year budget review report, the underperformance is also largely on account of higher than projected fuel consumption on the market.

The fuel levy projection was based on monthly consumption averaging 24 million litres and was expected to register a total collection of K17.7 billion at midyear.

Gondwe, however, expressed optimism that the picture will improve during the second half of the financial year.

Commenting on the development, economics professor Ben Kalua said non-remittance demonstrates government’s incompetence.

“This is a principal-agent problem. In this case, parastatals are agents and government is a principal and non-remittance shows that there is a serious problem,” said Kalua.

“Parastatals know more about what’s happening and what they are doing compared to the principal which is the owner. As such, the owner, in this case government should rise above everything and understand how its parastatals are operating,” Kalua said.

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