Finally, Minister of Finance, Economic Planning and Development Goodall Gondwe unpacked his proposed 2017/18 National Budget in Parliament last Friday.
It is a ‘Cautious Budget’ in which the minister tried his best to strike a balance between “lost” or foregone revenue and new sources of revenue to finance the annual financial plan set to roll out from July 1 2017 to June 30 2018.
Much has been said and written about the tax measures, especially the revision of the tax-free or zero-rated bracket from K20 000 to K30 000. This decision will, on paper, cost Treasury an estimated K10 billion. However, Treasury is bound to recover the K10 billion and more from the newly introduced 35 percent tax bracket for individuals earning K3 million and above in a month. Such individuals could be few, but, surely, their contribution to the tax purse at the 35 percent rate will be colossal.
Under the tax measures, Goodall also removed 16.5 percent value-added tax (VAT) on milk, but maintained VAT at the same rate on tap water, effectively making access to potable water among urban dwellers nationwide a preserve of the few that can afford.
In a further desperate attempt to “widen the tax base”, Goodall has introduced a 10 percent excise tax on television subscription. This means that subscribers of MultiChoice Malawi’s digital satellite television (DStv) and GOtv as well as those of other service providers such as Zuku Television, Star Sat and Azam TV will have to pay 10 percent or one tenth more for their next monthly subscription. In case of GOtv premium bouquet pegged at K7 600 per month, it means subscribers will pay an extra K760, pushing the cost to K8 360.
What I found weird about the introduction of the 10 percent TV subscription tax was Goodall’s justification. With due respect, it did not make sense.
In his statement, the minister said: “Government is already providing free television services through MBC [Malawi Broadcasting Corporation] TV and it is pleasing to note that there are several free TV services providers such as Zodiak and Times TV, just to mention a few, in addition to free religious TV service providers.”
Really? What happened to choices? So, the government wants to prescribe what the people can watch? Is the tax some subtle form of censorship?
What Goodall has done in introducing the 10 percent excise on TV subscription is tantamount to taxing access to information. Pay TV bouquets offer Malawians and subscribers at large more than entertainment. There are new channels, education channels and several informative documentaries.
The perception could be that pay TV is a luxury and a preserve of the middle class who government always tends to “target” whenever it wants to raise more taxes. But the reality is that nowadays the majority of low income earners subscribe to one pay TV service provider or another. Through the TV subscription tax, what government has done is to eat into the K10 000 freed in the tax-free bracket, thereby eroding the masses their disposable income.
I recall the other time government introduced some excise tax on short messaging service (SMS) and voice calls. That is all retrogressive in a country striving to improve access to information and communications technology (ICT) services.
My humble plea to Goodall and the members of Parliament (MP) is to remove the TV subscription excise tax. There are other areas new taxes can be introduced to recover the potential loss.
I maintain that the excise tax on TV subscription is a form of censorship. Information is power, let Malawians have access to diverse source of information, especially in this global village. We cannot afford to restrict them to “local channels” even in the spirit of Best Buy Malawian.