VAT removal excites dairy industry
Malawi Milk Producers Association (MMPA) president Herbert Chagona said this in an interview on Thursday when Nation Online sought his association’s comment on government’s decision to scrap off VAT on Milk.
“This move [removing VAT on milk] has the potential to increase consumption of milk and milk products in the country and provide an opportunity for producers to produce more milk for the public,” said Chagona.
Finance Minister Dr. Ken Lipenga announced the removal of a 16.5 percent VAT on milk and related products in February this year which was imposed in the controversial zero-deficit budget which is set to expire next month.
Lower price
Lipenga said the decision was to show Malawi government’s determination to streamline and consolidate Malawi ’s VAT regime in tandem with international best practices.
“Such a move will also lower the price of milk at the consumer level, which had risen by over 35 percent in the last year alone,” said Chagona.
He said this in turn will mean more income levels for milk producers as well providing employment in dairy industry.
Chagona reiterated that milk and milk products are an essential part of a healthy diet and the availability of these products in Malawi should be widely supported to improve nutritional imbalances in the diet of many Malawian children
Malawi’s milk per capita consumption, which is at 5 litres, is at the moment described as one of the lowest on the continent.
The World Health Organisation (WHO) recommends over 200 litres per capita for a healthy diet.
“In a country where 48 percent of the children under five are stunted in their development according to a UN report, this is a very welcome move,” he added.
‘Scrap more tax’
However, Chagona also said milk farmers would wish government to remove the VAT and import duty on dairy equipment and dairy supplies coming into the country in the next national budget.
He argued that following a recent study conducted by his association, such taxes have proven to be responsible for the increase in the cost of production.
“Dairy equipment such as milking pails, milk churns and milk cooling tanks are not produced in Malawi and have to be imported from other countries. This is the same for artificial breeding supplies and animal health products.”
He also said by removing such taxes, the price of milk could be stabilised and farmers would not be forced to increase the price of milk at the farm gate. He said at the moment farmers are receiving a price that is below their own cost of production.
Lipenga could not be reached on Thursday to comment on MMPA’s proposal to scrap off VAT and import duty on dairy equipment and dairy supplies as he was reportedly outside the country.
