Groups lobby for VAT removal on bread, utilities
Malawi Economic Justice Network (Mejn) and Economics Association of Malawi (Ecama) have asked government to remove value-added tax (VAT) on piped water, bread and electricity.
Mejn executive director Grace Kumchulesi and Ecama president Chikumbutso Kalilombe made the lobby in their respective input to the 2019/20 National Budget during a pre-budget consultation meeting at Bingu International Convention Centre in Lilongwe.
In her presentation titled Insights from Civil Society Organisations (CSOs) at the session presided over by Minister of Finance, Economic Planning and Development Joseph Mwanamvekha and also attended by Reserve Bank of Malawi (RBM) Governor Dalitso Kabambe, Kumchulesi said by imposing VAT on such ‘basic needs’, government is contracting its own efforts to provide safe water and ensuring that more Malwians have access to electricity.
She also proposed that in the next budget, government should increase the tax-free bracket to at least K80 000 to get closer to the food poverty line.
Currently, pay as you earn (Paye) tax-free bracket is at K35 000, a slight increase from K30 000 in the 2017/18 National Budget.
Kalilombe said imposing VAT on piped water runs counter to efforts by government to provide safe water to less privileged.
On additional Paye bracket, he said Ecama also feels that government should put an extra bracket of 35 percent for salaried income of above K3 million.
Said Kalilombe: “We also want government to consider tax rate reduction in Paye, VAT and corporate tax while ensuring that non-tax revenue base is expanded.”
He also said it was important for government to entrench macroeconomic stability by ensuring both low interest and inflation rates while ensuring low budget deficits as well as low debt levels.
Reacting to the proposals by Mejn and Ecama, Mwanamvekha said government has taken note of all the suggestions but it would be difficult for his ministry to accommodate them all.
