Non-tax revenue under performance questioned

–Govt raised passport, drivers’ licence fees in H1

Non-tax revenue, which includes collections from passports, drivers’ licences and other services offered by government and its departments, underperformed between July and December 2014 although some of the fees were raised by over 300 percent.

Finance, Economic Planning and Development Minister Goodall Gondwe, presenting the Mid-year Budget Review last Friday in Lilongwe, noted that the underperformance of non-tax revenue and grants led to a total underperformance of domestic resources in the half year by K36.6 billion.

In the wake of donor aid freeze, government is implementing a zero-aid budget, which was initially pegged at K748 billion, but will have to be revised upward to K780 billion in view of a request by Gondwe for an additional K32 billion.

Last year, in a bid to raise more from non-tax revenue, government announced a number of initiatives, including a 300 percent increase in permits and citizenship fees while passports were raised by 320 percent.

In the same year, government also effected increases on certificate of fitness (CoF) by about 600 percent while other services at the Department of Road Traffic and Safety Services were raised by over 300 percent.

Gondwe said although tax revenues somewhat performed well, non-tax revenues underperformed while some expenditures overshot, forcing government to propose an extra K32 billion to the initial budget.

He said government would raise K13 billion from pledged additional grants, K8 billion from excess tax revenue while K10 billion would be borrowed locally to meet the proposed K32 billion extra budget.

Economics Association of Malawi (Ecama) president Henry Kachaje, responding in an e-mail questionnaire this week, said it would be a challenge but not unrealistic for government to raise more domestic revenue in view of the underperformance.

“It will require a more robust strategy that gradually increases the tax base. It will however be a challenge to raise more revenue domestically considering that many businesses might not perform very well in the first quarter of this year due to the negative impact of the floods on the economy in general,” he said.

Kachaje, however, said there is need to review expenditure and see where some savings might be made.

Commenting on free social services that are provided by government, he said it might be prudent to take stock of the social services.

Kachaje said there is need to reconsider the proposal to introduce a small fee to access certain health services, or at least reintroduce paying wards in public hospitals while in the next budget, government should seriously reconsider the Farm Input Subsidy Programme (Fisp) and increase the buying prices from K500 per 50 kilogramme bag to reduced burden the burden on government.