Government’s recently revised taxes have prompted calls for a minimum wage review to cushion Malawians against an escalated cost of living.
Centre for Social Concern (CfSC) economic governance officer Agness Nyirongo said in an interview that adjusting the minimum wage would “restore human dignity”.
The minimum wage—currently at K126 000 per month for employees in formal employment and K72 800 for domestic workers—was last reviewed in June this year.
“With the cost of living now close to K1 million per month, the current minimum wage is inadequate,” she said.
“Reviewing the minimum wage and encouraging the private sector to adjust salaries would restore purchasing power and protect human dignity.”
CfSC estimates the cost of living to be at K945 029 per month for an average household.
Several households, however, do not earn as much; hence, struggle to make ends meet.
Minister of Finance, Economic Planning and Decentralisation Joseph Mwanamveka told Parliament that the new taxes are meant to cushion such low-income earners.
Under the new tax regime, the zero Pay As You Earn (Paye) bracket has slightly increased from K150 000 to K170 000.
Those earning between K170 000 and K1.57 million will now be taxed at 30 percent, up from 25 percent.
Earners of up to K10 million will be taxed at 35 percent while those earning beyond K10 million will face a 40 percent tax.
Value Added Tax (VAT) has jumped from 16.5 percent to 17.5 percent—a six percent jump—while the Malawi Revenue Authority will now be collecting rental income on residential property.
Parliament on Tuesday passed the Taxation (Amendment) Bill which has such tax provisions, among others.
But as a further cushioning mechanism amid the new tax regime, Nyirongo said government should consider expanding the list of VAT-exempt items to include more essential goods such as maize flour, sanitary products, school materials and basic medicines.
“This helps reduce the regressive impact of VAT and supports low-income households,” she said.
Besides, Nyirongo said it would be important for government to enforce clear guidelines and enforcement mechanisms to prevent landlords from transferring the burden of rental tax to tenants unfairly.
Further, she stressed the need for consumer protection laws to be strengthened to avert exploitative practices.
Ministry of Labour acting deputy labour commissioner Lenius Daiton on Thursday requested for a questionnaire when asked about the wage review proposition.
But in a written response on Friday, Employers Consultative Association of Malawi executive director George Khaki said the private sector will be affected by the tax measures through profitability.
“With that being said, we are always looking at paying our employees meaningful wages and cushioning them from adverse economic situations,” he said.
“As such, employers will take these issues into consideration to make appropriate decisions based on the ability of each employer to make salary changes and overall productivity of the employees and the individual firms. We cannot have a one-size-fits-all solution.”
Khaki further said it is also important to acknowledge that the working population is a fraction of the national population, most of who are vulnerable and will be heavily affected by many of the tax measures.
He said: “It is incumbent upon those responsible to ensure the vulnerable are cushioned from the negative impacts of the new tax measures.”
In an earlier interview with our sister newspaper The Nation, Mwanamveka defended the new tax measures, which were introduced in the 2025/26 Mid-Year Budget Review, saying they were adopted after careful consideration.
Mwanamveka said Treasury has been deliberate to ensure those with a higher ability to pay should contribute more towards rebuilding Malawi’s economy.
The Finance Minister further said it was not correct that the revised Paye will disproportionately affect low-income earners, stressing that those earning less are better off than they were in the previous tax regime.
Economics Association of Malawi’s analysis of the 2025/26 Mid-Year Budget Review observed that while proposed tax and non-tax reforms are expected to increase revenue, they could also spark unintended economic pressures, necessitating critical trade-offs during the budget implementation.
“Therefore, the government must rigorously implement these reforms and exercise prudent management of public resources,” reads part of the analysis.
The analysis argued that raising Paye could reduce revenue as collections only reached 96 percent of the 2024/25 fiscal plan mainly due to the expanded zero-Paye bracket although rates for middle and high-income earners could partially offset this shortfall.
Besides, the analysis further observed that all things being equal, the increase in VAT rate is expected to increase VAT revenues by six percent, but it could be inflationary if companies pass on the tax increase to consumers, thereby reducing households’ purchasing power.
