Cooking oil prices high despite tax waiver
Local cooking oil manufacturing companies are yet to reduce prices of their commodity despite it being a tax-free product.
A snap survey in shops across the country indicates that prices of different brands of local cooking oil have not been adjusted despite Parliament waiving Value Added Tax (Vat) last month.
Some of the brands include Kukoma Cooking Oil, Golden K, Purola and Mulawe.
Parliamentarians scrutinised and debated the budget and demanded an exemption of Vat to cooking oil following an outcry from local manufacturers that they were struggling to compete with smuggled oil on account of the Vat they pay.
The Vat exemption is in the 2017/18 National Budget that amounts to K1.3 trillion.
Some shop owners who declined to be mentioned said they were waiting for the manufacturers to reduce prices.
“How do we effect change when we order the goods at the old prices? Once manufacturers reduce the amounts, we will also do the same,” said one shop manager.
However, officials from Capital Oil Refining Industries (Cori) and Sunseed Oil Limited refused to comment although sources from the two companies indicated sales had slowed down as traders are demanding prices that are in line with the Vat change.
But one of the local oil manufacturing firms, ETG Parrogate Cotton Limited, Operations-in-Charge, Rajneesh Dabral said the manufacturers are waiting to hear from the Malawi Revenue Authority on the removal of Vat.
“First, we wish to thank the government and other relevant authorities for removing Vat on oil which is the most basic commodity needed by every household. Oil producers in Malawi had been facing a stiff challenge posed by influx of illegal oil from neighbouring countries such as Mozambique as those countries do not have Vat on their local oil.,” he said.
However, Dabral said the reduction might not be huge due to other factors that needed to be considered by the government and other relevant authorities.
“Again, the overall objective of removing Vat is to bring down the cost price to the ultimate consumers. However, since oil is under exemption, the prices may not come down drastically as it would have been if oil was zero rated.” he said.
Consumers Association of Malawi (Cama) Executive Director, John Kapito, blamed both MRA and local companies for failing to implement the Vat waiver.
“The moment Parliament deliberated and agreed to waive Vat on cooking oil, it had an effective date which was the same day. Now the question that we need to be asking is: are we monitoring the prices to ensure that they have been reduced?
“So we must not let the manufacturers cash in on us neither should we allow MRA to delay in issuing the official Vat waiver on cooking oil,” Kapito said.
MRA Spokesperson, Steve Kapoloma, could not be reached for comment but sources within the tax body indicate that the institution will issue tax waiver on oil once President Peter Mutharika signs the bill.
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