Paye review next year—Gwengwe

Workers in the country will have to wait until the next Budget Meeting of Parliament before government decides to review Pay as You Earn (Paye) schedule they complain has eaten into their take-home pay.

Minister of Finance and Economic Affairs Sosten Gwengwe said in an interview yesterday there is no action yet from government despite calls to have the new schedule changed.

During International Labour Day celebrations on May 1 in Mzuzu, President Lazarus Chakwera pledged to engage Gwengwe on the matter, stating “he had heard the cries of the people” that the newly-introduced regime had reduced people’s salaries and eaten into their take-home pay.

However, in an interview yesterday, Gwengwe said only Parliament has the power to amend the Paye schedule as the national budget is law.

He said: “Paye is determined by Parliament during budget sessions. Once the budget is passed, you stick to it as your law until the budget is revised.

“So, up until such a time when Parliament is revising the revenues and expenditures of government, that’s the only time we can make changes [to Paye] schedule.”

In a separate interview yesterday, Malawi Congress of Trade Unions (MCTU) general secretary Madalitso Njolomole, whose institution petitioned Chakwera on the matter, said the Paye issue “remains a matter of great concern.”

He said: “We haven’t heard anything from the government. But we have been told that the meeting will be held in two weeks.”

The new tax schedule came into effect on April 1 2022 and maintained the zero-rated tax band at K100 000, but revised other tax brackets with incomes between K100 001and K330 000 taxed at 25 percent.

Under the new schedule, workers earning between K330 001 and K3 million are now subject to 30 percent Paye while those earning between K3 million and K6 million pay 35 percent tax and those above K6 million pay 40 percent.

So far, the revision of the Paye schedule is bearing dividends for government as the Malawi Revenue Authority (MRA) June 2022 report shows that K119.92 billion in Paye out of the targeted K117.36 billion was collected, translating into a K2.55 billion surplus.

In the 2022/23 Budget Statement, Gwengwe said Treasury had to find a balance to provide fair taxation and at the same time mobilise sufficient resources to deliver public services and spearhead development.