BusinessFront Page

Quest for better welfare

Malawi Congress of Trade Unions (MCTU) has urged Treasury to review salaries of government workers, increase the tax-free band and the minimum wage to help improve the welfare of majority of Malawians.

In an interview with Business News, MCTU president Charles Kumchenga observed that making the right policy review will help increase disposable incomes of workers as they strive for quality life.

He said: “All the three work as motivating factors which will help workers to work hard and effectively when they are considered.

“It will also help to have high production in the case of companies.”

Kapito: We want a responsive budget. | Nation

Kumchenga said MCTU want Treasury to increase the minimum wage by more than 50 percent from the current K3 461.54 per day or K90 000 per month.

This means if this proposal is anything to go by, the minimum wage would increase to K5 192 per day or K135 per month.

MCTU is also proposing for an increase in the tax-free bracket for employees from the current K150 000 to K250 000 while for government workers, the workers body wants salary restructuring where salaries, which have to be in line with their grades, have to be increased by 45 percent.

The Institute of Chartered Accountants in Malawi (Icam) also asked government to consider increasing further the tax-free bracket for employees from the current K150 000 to K300 000.

Icam chief executive officer Noel Zigowa justified the proposal in an interview, saying raising the pay as you earn tax-free bracket, also known as the tax threshold, can help low-earning employees in several ways.

He said: “By raising the tax-free bracket, low-earning employees will pay less income tax, resulting in higher take-home pay, incentivise low-earning individuals to join or remain in the workforce and help alleviate poverty and empower economic freedom and contribute to poverty reduction.

“Whilst this shall mean reduced government revenue, however, it will also help in reduction of the citizenry to rely on government for social services.”

Centre for Social Concern (CfSC) data shows that the average monthly cost of living for a family of six stands at about K578 843.

In the current fiscal year, the zero-rated pay as you earn (Paye) bracket was increased from K100 000 to K150 000 amid piling pressure on the Ministry of Finance and Economic Affairs  as consumers sought relief from a cost of living crisis that eroded their buying power.

Accordingly, the next K350 000 is taxed at 25 percent while the next K2 050 000 is taxed at 30 percent and K2 550 000 at 35 percent.

In April last year, Treasury approved a 12 percent salary increase for civil servants, and another 15 percent pay hike in January 2024, but with arrears dating back to November 1 2023.

The new salary hike pushes the wage bill from K70 billion to K100 billion.

Meanwhile, Consumers Association of Malawi executive director John Kapito said that having a budget that will improve the welfare of Malawians, create employment and wealth and grow the economy would is what Malawian consumers are looking for.

“We want to see a budget that doesn’t put pressures of taxes on the poor and is responsive to the current economic situation,” he said.

Minister of Finance and Economic Affairs Simplex Chithyola-Banda has since indicated that the upcoming budget will continue promoting growth policies guided by implementation plans of the Malawi Vision 2063,

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Back to top button