The Oxfam country office says the proposed K1.7 trillion 2019/20 Budget has potential to reduce poverty in the country, but it also has regressive propositions that need review.
In its analysis of the document, summarised in a statement issued on Wednesday, Oxfam has queried government’s proposal to introduce one percent withholding tax on non-bank mobile money transactions as well as the upward adjustment of all fees for government department services.
The organisation also questions why government wants to spend K1.6 billion of public resources to construct two stadiums for private entities—Nyasa Big Bullets and Be Forward Wanderers—at the expense of poor Malawians.
Oxfam country director Lingalireni Mihowa has since said the institution will be engaging relevant parliamentary clusters to lobby for such issues to be looked into critically.
She said: “The introduction of one percent withholding tax on non-bank mobile money transactions has the potential to undermine the drive towards financial inclusion. The minister announced the intention for upward adjustment of all fees for all government department services. Oxfam’s Dangerous Divide: State of Inequality in Malawi study report notes that any form of user fees on public services bites income of the poor more than the rich.”
Mihowa has since urged government to reconsider the adjustment, especially on essential services, arguing this will trap less privileged Malawians in poverty and worsen inequality by denying poor people access to vital services.
She further argues that stadiums are not a pressing issue especially that the budget has already proposed more meaningful youth focused interventions through provision of loans, youth employment though internship and afforestation programmes among others.
“At the state in which public health and education systems are in the country, one would not expect the government to allocate a huge amount of public resources to finance private entities. K1.6 billion is enough to construct 106 standard school blocks with two classes each or stock medication for a rural health centre that would benefits thousands of people who are currently struggling to access quality healthcare,” said Mihowa.
On a positive note, the organisation has commended government for reviewing the minimum wage from K35 000 to K45 000 as it reduces the tax burden on the less privileged people, and removal of value added tax on solar equipment.
Earlier, Minister of Finance, Economic Planning and Development Joseph Mwanamvekha defended funding of the stadia, saying that the football fraternity has many supporters who need to benefit from national resources.
On taxes on mobile money transactions, Mwanamvekha said the measure seeks to motivate citizens to contribute toward national building through payment of taxes and ensure that government has scope to improve service delivery.