MRA continues to miss targets, economy blamed
At a time government is geared to raise more revenue to reduce the budget deficit, Malawi Revenue Authority (MRA) continues to miss its set targets, a situation that threatens government operations this fiscal year, an economist has said.
A tax revenue outturn from MRA published on Monday shows that the tax collection agency also missed its target for June 2015 by K6.1 billion ($13.6 million), or 13 percent, having collected K41.65 billion ($92.6 million) against the projected K47.7 billion ($106 million).
Cumulatively, gross tax revenues for the fiscal year 2014/15 amounted to K472.5 billion ($1 billion), which is four percent below the projected revenue of K494.7 billion ($1 billion), blamed on under-collection in provision tax, withholding tax, import and domestic value added tax (VAT), import and local excise, among others.
University of Malawi Chancellor College economics lecturer Ben Kaluwa yesterday attributed the sluggish performance to the failure by the private sector to perform to its full potential due to unsettled arrears of over K150 billion owed by government.
He said the non-payment of the arrears has depressed the performance of the private sector, resulting in subdued tax revenue.
Kaluwa also said people are now spending less due to the rise in inflation which has diminished people’s disposable income; hence, affecting revenue collection.
“If Malawi, just like other countries, had a barometer that measures the economic performance in terms of how people spend, it could be revealed that the private sector has been depressed, a situation which impacts negatively on the economy and revenue collection,” he said.
Earlier, Economics Association Malawi (Ecama) president Henry Kachaje said meeting set targets by MRA would require a more robust strategy that gradually increases the tax base.
He cautioned that it will be a challenge to raise more revenue domestically, considering that many businesses might not perform well in the first quarter of this year due to the negative impact of the floods on the economic performance.
The published revenue performance report said income and profit totalled K19.8 billion ($44 million) against a projection of K22.6 billion ($50.2 million), representing a 12 percent underperformance on account of pay as you earn (Paye), fringe benefits and provisional tax.
But MRA said the 2014/15 tax revenue collection is 20 percent higher than the prior year’s collection, mentioning that the lower than expected increase could be attributed to the devastating floods that hit the country.
“The floods damaged the road and rail infrastructure thereby affecting the floor of exports and imports of merchandise into the country leading to lower collection of import tariffs,” said the statement.
