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Malawi Revenue Authority misses mid -year target

The Malawi Revenue Authority (MRA) has missed its half-year domestic collection target for the fiscal year 2017/18 (June- July) by 9% (MK10 Billion), Malawi News understands.

According to ActionAid Tax monitoring department, Domestic tax collection is officially projected at K900 billion in 2017/18, and so far, only K412 billion has been delivered.

This is slightly lower when compared to the mid-year out turn for domestic revenue in 2016/17, which came in at K400 billion.

“This means the country’s fiscal deficit is expected to widen further “Action Aid said.

It appears that the development has however not quelled the Government’s appetite for spending as it has recently purchased top of the range vehicles, some of them pegged at over K112 million each, for Principal Secretaries in government’s ministries, departments and agencies (MDAs).

The 2017/18 tax target was set banking on stringent measures to improve tax compliance and the creation of a new minimal tax bracket for top earners.

Professor of Economics at Chancellor College Ben Kalua has said the tax collection estimates were over ambitious and that the economy was too stressed to meet the demand.

“The country’s tax collection base for individuals and the cooperate sector is ok and is in line with international standard so for the revenue tax collection body to miss its target it could be because government was over ambitious about the ability of the tax collector,” Kalua Said.

Malawi Economic Justice Network – MEJN Executive Director Dalitso Kubalasa said the country’s revenue base constantly remains under serious threat of failure to meet the targets.

“We anticipated this in our 2017/18 budget analysis and feared the same,” Kubalasa said.

He said tax evasion, tax avoidance, and corruption generally remain among major challenges hampering effective tax collection and general tax administration in Malawi.

According to Kubalasa, it is still surprising that to date, no major tax evasion, tax avoidance, and corruption case can be recollected of individuals or corporate entities that have been successfully prosecuted and charged.

“Corruption in the taxation system seems to be a cancer that has ‘almost’ been accepted by the concession of defeat on the account that it is too technical and complex to counter,” Kubalasa said.

MEJN is meanwhile pressing for sustained and urgent actions towards strengthening and tightening the taxation systems to curb the problem.

According to MCP spokesperson on Finance Alexander Kusamba Dzonzi, the scenario is undesirable as there is too much domestic borrowing and foreign loans.

“It is obvious that in the absence of diverse tax collection, government is building-up expensive public domestic debt, ”Dzonzi said

He said it is likely that this year’s revenue target will not be met. 54 percent of country’s budget spending is by interest payments, subsidies, and civil service wedge bill.

With the cholera outbreak, dry spell and fall army worms faced in some districts, other ministries like Health and Agriculture will possibly need extra resources in order to cope with the situation.

MRA’s Director of Corporate Affairs Steve Kapoloma was not readily available for a comment.

MRA chairperson, Eric Chapola, however, told the media last week that they have failed to collect the projected mid-year revenue due to a lack of direct budgetary support but said he was optimistic that things will improve by the end of the second quarter.

The National Assembly is from next month expected to scrutinise the 2017/2018 national budget, and various stakeholders are eagerly anticipating to know how the resources have been managed.

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