Employers caution on Paye bracket revision
The Employers’ Consultative Association of Malawi (Ecam) says it is concerned with Treasury’s move to revise Pay As You Earn (Paye) to 30 percent for incomes between K330 000 and K3 million per month.
In its 2022/23 National Budget response statement, the association said the tax imposed in this range will not increase disposable incomes as many Malawians earn below K1 million.
Reads the response in part: “Therefore, the revision will not cushion this category from effects of the increased cost of living in the country so to enable many working Malawians to attain a decent standard of living.
“Thus, Malawi will not reap the long-term benefits of increased expenditure to spur productivity, and job creation that have the effect of increasing the tax base.”
Ecam has since urged Treasury to consider revising the Paye tax bracket so that earnings between K100 000 and 1 million attract the same Paye tax rate.
The employers have, however, applauded the Minstry of Finance for removing value added tax (VAT) on tap water which it says was distorting water bills and creating the impression that the price of water is high.
Reads the statement: “On the other hand, the employers were also looking forward to the government to reduce VAT on pension administration fees to lessen the cost of provision of pension.
In continuing to improve the progressivity of the Paye system while ensuring that government continues to raise realistic revenues from Paye, Treasury has revised the monthly Paye schedule from 0 to K100 000 at 0 percent; between K100 000 to K330 000 at 25 percent; between K330 000 to K3 million at 30 percent; between K3 million to K6 million at 35 percent; and above K6 million at 40 percent.
In his 2022/23 National Budget Statement a fortnight ago, Finance and Economic Affairs Minister Sosten Gongwe said taking various demands into account, government had to find a balance that would provide fair taxation and at the same time mobilise sufficient resources to deliver public services and spearhead development.
He said: “Resource mobilisation to support the 2022/23 National Budget is anchored on enhancing tax administration and automation of collection of non-tax revenues through improved taxpayer services, enforcement and compliance.
“The revenue measures that I am to announce, therefore, take into consideration the need to provide a conducive environment for the private sector to thrive and the need to mobilise adequate resources required for provision of public services and development programmes.”
In the 2022/23 Financial Year, domestic revenues are estimated at K1.636 trillion, of which tax revenues are estimated at K1.528 trillion while other revenues have been estimated at K107.8 billion
