By Ezelina Kamaliza:
Malawi Congress Party (MCP) spokesperson on finance, Collins Kajawa, has proposed a further increase in the Pay-As-You-Earn (Paye) tax-free bracket from K45,000 to K50,000.
Kajawa made the suggestion on Tuesday in his response to the 2019/2020 national budget which Finance Minister Joseph Mwanamvekha presented in Parliament recently when he announced that Paye bracket had been increased from K35,000 to K45,000.
In a statement which Kajawa read in Parliament, he said pushing the taxable bracket to K50, 000 could have a meaningful impact on increasing disposable income for the working class.
However, economic expert Ben Kalua has said increasing the tax-free band could bring in the problem of job rationalisation.
“There is a catch to increasing the tax-free band. The practicality is that more people will lose their jobs as employers want to meet the requirement,” Kalua said.
He said such a move might go against the country’s plans to reduce unemployment.
Kalua said MCP’s suggestion was good but it would cause disparities among those employed in the informal sector, fearing it might lead to employees laying off domestic workers.
Kalua said creating an environment that promotes small and medium enterprises would empower people to create their own means of employment.