The Malawi Confederation of Chambers of Commerce and Industry (MCCCI) has lamented failure by the government to illuminate policies which can provide a cushion for the private sector in the short to medium term in the 2020/21 national budget.
A response to the budget published by the Confederation, which The Daily Times has a copy of, indicates that the overall proposed budget does not contain tax incentives necessary to reduce the operating cost base of most firms to assist them improve their competitiveness during this time of reduced economy activity.
It says that it is very clear that the survival of private sector companies during this crisis is largely dependent on their own efforts.
“The budget has placed a lot of concentration in Public Finance Management as well as intensifying tax collection campaigns from the informal sectors in a bid to widen the tax base which is a commendable move.
“However, the budget has not incorporated the projected contractions in the main GDP contributing sectors such as Retail and Wholesale, Tourism and Manufacturing sectors which have the potential to greatly distort the projected revenues,” reads the response in part.
It further notes that although an increase in tax free band is a popular move, government has inadvertently contributed to narrowing the tax base even further.
“The increased disposable income for employees may also put a lot of pressure on trade balance by stimulating imports since local firms have not been given assistance to recover from the pandemic nonetheless it is the Confederation’s hope that government will use the scarce financial resources prudently by focusing on essentials and ensuring that it embarks on development projects that are in line with the medium term as well as long-term development strategy for the country,” reads the response.
The Confederation has since asked government to reconsider the proposals that it submitted as proposed contributions to the budget so that private sector is not completely sidelined in the 2020/21 national budget.