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Pope


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where to Malawi?
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 The annual percentage growth of domestic revenue collection in Malawi has been dropping over the past three years, raising fears among some quarters that the trend could take the country back to the days of heavy domestic borrowing and runaway inflation.
But government says the situation is due to tax reforms it has introduced over the period.
And the benefits of such measures, say authorities, will come in the long run.
Weekend Nation has found out that the Malawi Revenue Authority (MRA) collected about K50 billion in the 2004/05 financial year, representing a growth rate of 35 percent. The growth rate dropped to 23 percent in the 2005/06 when MRA collected about K60 billion.
In the current financial year, the annual growth rate is expected to drop to 16.8 percent if MRA collects K70 billion as budget estimates show.
During the period under review economic growth, which impacts on domestic revenue levels, has been rising steadily, raising questions on why the same was not reflected in tax revenue trends.
According to figures obtained from Treasury, the countrys economy grew by 3.5 percent in the 2004/05 fiscal year, jumped to 5.3 percent in the financial year that followed and is expected to rise to seven percent in the current fiscal year.
This trend reveals that although tax volumes have been going up, the difference over the past three years is not significant enough to increase annual tax growth.
MRA public relations officer Steve Kapoloma said MRA was on the receiving end as it is government that sets the targets. He said their job was to collect taxes in accordance with set targets.
Any questions relating to changes in revenue should be forwarded to government because they are the ones who set targets. We are not authorised to comment on targets which they give us. The question on why they give us lower targets can best be answered by government, Kapoloma said.
When it was put to him that MRA has in the past gone far beyond target levels by as far as 36 percent in annual growth, Kapoloma declined to comment.
Finance Minister Goodall Gondwe referred Weekend Nation to the Director of Economic Affairs in the Ministry of Finance Perks Ligoya who said they come up with targets for MRA based on a model that puts into consideration the Growth Domestic Product (GDP) and the performance of the tobacco industry, among other factors.
He disclosed that a team of International Monetary Fund (IMF) experts arrived in the country last week to work with MRA on how to improve systems.
They would then make recommendations to government to see if there are changes we can make to improve the tax system. However, MRA has generally done well for the past five years though there is still room for improvement, he said.
Secretary to Treasury Radson Mwadiwa, while admitting that the trends show that tax growth has been decreasing, argued that was as a result of tax reforms government introduced.
Every year we have tax measures, for example, this year the income tax free bracket was increased from K5000 to K6000, what it means is that this will reduce what MRA will collect this financial year if you compare with the previous financial year. We are looking at long term benefits, Mwadiwa said.
Mwadiwa said that did not mean that MRA was not doing its job because the major issue was to grow the economy so that the tax base is increased in turn.
If the economy does not grow, where do you think MRA is going to collect revenue from? The economy should grow first then we will have new companies on the scene who will employ people and those employees will be paying tax. The companies would also be paying tax and that expands the revenue base, he argued.
Asked whether the decline in tax growth does not impact on budget estimations, Mwadiwa said the countrys budget was not a mechanical thing because it is systematically done



Is the govnmt trying to reduce overtaxation on the citizen or we are reducing the industrial base which is our tax payer.Are we on track economically?We need to talk.


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mulomwe


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A Malawian worker is lowly paid and heavily taxed, maybe the govt should look into other ways of getting money ie. stop giving tax holidays to foreign investors.

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ndsote


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I suppose we do not have a large enough industrial base to collect revenue from.There is only so much you can tax from individuals and if these individuals are not getting jobs then surely the tax growth rate will decline. We should encourage industrialisation thereby increasing our tax base.Corporate tax is the way to go.

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Pope


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but the govnmt is basing the reduction to tax window on PAYE, the question is,how do we quickly attract investors into the country?

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ndsote


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But isn't the tax window on PAYE based on things such as inflation?(what basic ammenities an individual can buy with what they earn).The govt has to go to work in making Mw an attractive destination rather thatn waste time on politics.They have a job to do ie make mw prosperous.You can hardly find any useful info about mw on the internet.What are they doing.There's no way investors will go there if they can easily access info about aan equally poor competing country on the net.They should also invest in infrastructure such as roads etc Power and water are also problems.Fix those things first.Make them baby step and see where that takes us.

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Pope


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ndsote,the tax window I meant is the amount of money that goes without PAYE tax,for example it moved from MK5000 to Mk6000 if am not wrong.But you are right that our infrastractures are in state of shame, I once travelled home with a small car and guess what happened?Most parts of malawi has no lights,am told 2500000 pipo have access to escom power,sad enough theres no clean water,let alone the water pipes Kamuzu left.

-- Edited by Pope at 10:26, 2007-04-03

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bingiza


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Too much politicking is spoiling everything, imagine what can Bingu do when Atcheya is heavy breathing on his neck yo wrestle power from him?
We understand that we have to pay tax and how that tax is used will determine what investors will do take for instance the roads and electricity issue are we really sure that we cant adequately maintain what was built a few dcecades ago? On second thought why dont we just buy a new set all together, i would be happy to see Escom crying of paying back a loan and NOT GIVING WHTAEVER EXCESS they have to govt honestly for what, doesnt govt get budgetary support from other sources. Look at the roads why priorities nseu waku masambanjati to bangula just because we have people trekking with bananas in that direction do we really know which side of our bread is buttered?
I might bore u with a lot of questions but they make me think. We are not development conscious and sorry to say Malawians are lazy when it comes to community mobilisation we always think somebody else will do it for us.

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eetchef


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Is this an example of the inequity of taxing iniquity?

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Pope


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eetchef wrote:

Is this an example of the inequity of taxing iniquity?

and who carries the day............



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bingiza


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We are all losing

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