Public tax collector Malawi Revenue Authority (MRA) says it has surpassed its revenue collection target for the months of July and August by K11 billion.
MRA said yesterday it expects a further improvement in the first quarter of the 2018/19 fiscal year which rolled out on July 1 largely due to administrative changes it has implemented.
The public tax collector broke its success story to the Budget and Finance Committee of Parliament in Lilongwe yesterday when it outlined the 2018/19 revenue projections and steps taken to avoid a scenario of the previous financial year when it missed its mid-year target by K41 billion.
MRA deputy commissioner general Roza Mbilizi, who led the team, conceded that revenue collection was poor last year owing to poor the performance of Pay As You Earn (Paye) taxes which MRA found to be strange.
However, she said Paye is still projected to grow by 13 percent this year.
In July, MRA had a target to collect K83 billion, but beat it by K5 billion when it collected K88 billion while in August, MRA collected K79 billion or K6.5 billion above target.
In a presentation to the committee, MRA corporate affairs manager Steven Kapoloma said: “MRA has started on a good note, with K168 billion collected out of the targeted K158 billion, gaining us a positive variance of K11 billion.”
The attained target was attributed to implementation of the Integrated Tax Administration System, now known as Msonkho Online, to improve the administration and enforcement of domestic taxes.
In this financial year, MRA projects to collect K961 billion, 14 percent above last year’s revenue collection projection.
Explaining factors that contributed to failure to meet the 2017/18 target, Mbilizi said macro-economic situations notwithstanding, MRA observed that the largest under-collection was in Paye which was unexpected.
She also told the committee that basing revenue projections on gross domestic product (GDP) growth and not projected economic performance contributed to the missed targets in the last financial year.
“You expect salaries to remain constant or go up unless there have been drastic measures by the public and private sectors such as downsizing. We did a technical overhaul to understand what went wrong and this helped us a lot and we should be getting a lot from our operators this year,” she said.
Among the operators is the government which plans to recruit 5 000 interns in this financial year with a financial injection of K4.8 billion.
MRA has also embarked on an auditing exercise of its large taxpayers to root out under-declarations by the public and private sector as one way of rooting out the problem.
In this regard, the public tax collector expects a 49 percent growth in penalties levied on those who default or under-declare taxes.
The committee, however, did not fail to take to task the revenue body for targeting those deemed critical of the government, among them media houses and opposition politicians.
MRA has denied targeting those critical of the government, arguing that tax non-compliance is done by both sides of the political divide.
Mbilizi said MRA has gone for individuals in government or people aligned to political figures but the individuals do not make the issue public.
She said: “But you find that people tend to go public and claim they are being targeted. The question for them is: have they paid the taxes being mentioned?”
However, the committee cited taxpayer-funded Malawi Broadcasting Corporation (MBC) which they claimed owes MRA billions of kwacha but has not remitted these and is not taken to task unlike some private sector firms.
In response, Mbilizi mentioned media houses that have been paying taxes and would not cry out that they are being targeted by MRA because they pay.
In an earlier meeting with the committee in May, MRA attributed its undercollection to prolonged power outages which crippled production in the economy.
MRA stated then that electricity problems negatively affected production of most businesses, leading to a reduction in importation of raw materials on which value-added tax (VAT) is levied.