Government at the crossroads

Hon Folks, it may look as if the business captains are pushing it by asking for a tax reduction to stimulate business growth, more so when the budget itself has been drastically chopped to K1 trillion.

It was at nearly K1.3 trillion in 2017/2018 fiscal year then reduced to K1.1 trillion by midyear when it became apparent the ailing economy couldn’t yield K1.3 trillion in domestic revenue.

The reduction to K1 trillion in nominal terms implies having much less buying power in real terms in a year of elections when we have seen signs of desperation to win at any cost.

Already trending in the public domain is the Machiavellian move the executive made in November 2017 to exploit the gullibility of MPs by enticing them with K40 million each windfall to vote against changes to electoral reforms bills.

Now pressure is mounting on Finance Minister Goodall Gondwe to go and, for the first time, he is not even attending the budget consultations, leaving the task to his PS Ben Botolo.

Goodall is accused of juggling approved allocations in the 2017/18 development budget so government could realise K4 billion for the appeasement, initially targeted at 86 MPs only. What a way to rig the elections!

But next year people don’t just want free and fair elections. They also want investment in irrigation farming to ensure food security, which also helps stabilise the economy by containing inflation, is sustainable in these days of climatic changes and environmental degradation.

Malawians also want improved quality of education so we have the human capital that can drive our beautiful country out of the poverty web. Students want to be empowered with business acumen so they don’t have to move from office to office, looking for jobs that are not there.

All these good ideas will require money but so too the business captains. They need cash to generate the wealth from which government squeezes its revenue.

Heavy taxes from healthy and growing businesses makes sense but heavy taxes from ailing businesses  is a sure way of starving the goose that lay the egg. Government may end up losing both the bird and its egg.

Which is why even in hard times, it is important for political leaders to balance their insatiable appetite for sweet public revenue with the equally compelling demand for investment in wealth generation, a task largely in the domain of the private sector.

Failure to strike a balance results in having a State that is larger than the economy characterised by soaring a national budget against declining economy. From the voter’s pedestal, the sign of this unhealthy imbalance is opulence in the upper echelons of power against growing poverty and deprivation among ordinary citizens.

Is there anything government can do to strike the balance and ensure the prevailing economic stability is sustained?  My take is a big YES. All it takes is allowing sanity to prevail and doing things differently.

When sanity prevails, government will take drastic and decisive measures to seal leakages in the public finance management system. Isn’t it amazing that government is adamant and indifferent even when donors have opted for off-budget financing of developmental projects, afraid of using Account Number 1 which someone described as a “leaking bucket?”

Transparency International (TI), Afrobarometer and other experts have measured and found corruption to be getting worse by the day in Malawi. High and low level corruption has spread from the Capital Hill to the districts, gnawing at Local Development Fund (LDF) and Constituency Development Fund (CDF) like fall armyworms.

It is estimated that the loss through corruption and fraud is up to 30 percent of the revenue government collects annually.  Some say the loss is equal to 5 percent of the GDP. What’s difficult to measure is what, if any, government is doing about it.  APM is on record as having blamed the media for exaggerating the prevalence of corruption in Malawi, really?

If government stitches its coffers, ensuring every tambala of its revenue is used for the intended purpose, and seriously cut on wasteful spending, it’ll pay for its commitments with 30 percent less than what it needs now.

That will ease its hunger for more revenue and allow the business captains to plough back more of the wealth they generate into their businesses.