Institute of Chartered Accountants in Malawi (Icam) and Economics Association of Malawi (Ecama) have joined other analysts and think-tanks in warning that government’s newly- introduced tax measures could deepen inflationary pressures and worsen household welfare.
The revised fiscal plan, presented in Parliament by Minister of Finance, Economic Planning and Decentralisation Joseph Mwanamvekha on November 21, includes the increase in value added tax rate from 16.5 to 17.7 percent, 0.05 percent levy on bank and mobile transfers, minimum alternate tax on turnover and the lowering of the super-profit tax threshold to K5 billion from K10 billion.
In an interview on Wednesday, Icam chief executive officer Noel Zigowa said the upward revisions reflect the government’s attempt to broaden revenue mobilisation in a challenging economic environment.
“These tax changes speak to an urgent need to keep the government functioning under difficult conditions,” he said.
Ecama president Bertha Bangara-Chikadza, on the other hand, said the package signals a push toward restoring fiscal discipline.
She said the government’s parallel expenditure controls, including limiting foreign travel, suspending vehicle purchases and intensifying payroll audits, as evidence of an attempt to rein in inefficiencies and better manage the wage bill.
On Monday, opposition Malawi Congress Party spokesperson on Finance Eisenhower Mkaka and Budget and Finance Committee chairperson Sosten Gwengwe criticised the new tax measures government has introduced, saying they are punitive.
