The Agriculture Committee is expected to deliver a motion lobbying for the removal of milk from the Value Added Tax (VAT) bracket to Parliament later this week.
In October last year, government approved amendments to the VAT Act consequently removing exemptions and zero rating on basic commodities such as bread, piped water, milk and laundry soap.
Zero-ratings are commonly used by governments to lower the tax burden on low-income households. The Committee has observed that applying the 16.5 tax threshold on milk has made the commodity inaccessible to most households.
Chairperson of the Committee, Joseph Chidanti- Malunga, said there is need for the minister responsible for finance and economic planning to remove milk form the VAT bracket arguing the new tax measure has increased the price of milk.
Malunga made the remarks in Lilongwe on Thursday when his committee met Civil Society Agriculture Network (Cisanet). Cisanet has recently been in the limelight calling upon legislators to remove milk from the VAT bracket.
Our investigations show that the price of milk has increased by over 45 percent in the last two months.
A dairy farmer, Miriam Tsonga, also confided in the Daily Times indicating that some companies also reduced the buying price of milk following the amendments.
“The main constraint to growth of the industry is the limited purchasing power and the introduction of VAT which has increased the milk price to the consumer,” she said.
Malawi Milk Producers Association National Director, Herbert Chagona, said including milk among items that qualify for VAT has affected the entire milk value chain.
“It is disheartening that barely three years after an amendment to remove tax on milk, it has been introduced again,” he said.
Chidanti-Malunga said the committee will bring the issue to the attention of the National Assembly to move the Minister of Finance to consider removing the tax.
“It is our duty to take up the case with the Ministry of Finance to remove the tax on milk,” he said.