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Milking a thin cow

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Puludzu

From the onset of the week, the talk around town has revolved around the recently announced Value Added Tax (VAT) that the tax authority, in accordance with the guiding amended law, has imposed on non-banking services (whatever that means!). What actually stirred the hornet’s nest was the move by the Bankers Association of Malawi (Bam) and some of its membership, who announced and decided to pass on the burden to the customer.

Rightly so, a lot of customers were riled and have been up in arms since then, blaming whichever party to the issue they feel is at fault, more especially their particular banks.

The development has also seen the Malawi Revenue Authority (MRA) talking tough, warning the commercial banks not to saddle their customers with the 16.5 VAT which, we are told, the banks had been collecting already but fell short of remitting the same to the tax authority.

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It has now become a case of ‘he said/she said’ and never mind whichever group you are siding with, the fact of the matter is that there is one particular side which is not being sincere in this whole matter. If you were to ask me, I would say nobody among the bank customers is trying to run away from their obligation of paying tax but then everybody, including commercial banks, must be able to fulfill their end of the bargain. If it is true that the banks, a majority of whom have been posting supernormal profits for years now, were not remitting the VAT percentage that is supposed to go to the tax authority, then indeed they have no business bothering us with the nonsense about imposing this ‘new’ tax on us, which has, in fact, taken effect on November 01, 2021, according to their notice.

Typical of Malawians, and the country being what it is, the issue has slowly fizzled out to the background and, just like that, the commercial banks have gone ahead with their arrangement to continue laughing and smiling their way as they milk dry the consumer. Surprisingly many are eerily quiet as if they are not being affected; whether it is a case of having very fat pockets or simply being indifferent, we will never know.

They do say talk is cheap, which perhaps best explains why a lot of people chose not to read much into the utterances by the country’s Finance Minister Felix Mlusu the other day, when he was on a tour of duty in Chikwawa, where he warned that he would personally intervene on the issue should commercial banks maintain their position on the VAT subject; further calling out the regulator of financial service providers to wake up from its deep slumber and spring into action. Well, the authorities might talk all they want, but the fact of the matter is that the banks have gone ahead with their arrangement and not many would, in my view, bother to raise a complaint with the central bank, as advised by the minister, nor would the banks reverse the money which they have already collected from their customers.

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Regardless of that, I would still give the banks the benefit of doubt, considering that Bam is insisting that it has simply made a sound business decision, in line with the requirement of the law. I wonder what this latest development, however, would do to the commercial banks’ recent quest to reel in the unbanked such as groups of women who organised themselves into chipereganya or Village saving groups and were undoubtedly a target for most commercial banks as they have been handling huge sums of money, which they share or lend out amongst themselves on a rolling basis. I doubt if at all such people would continue toying with the idea of joining banks, especially if it turns out that, indeed, banks have been short-changing their customers by not remitting VAT collected to the authority.

Anyway, I am not here to decide on behalf of a chipereganya group or any individual for that matter…the issue here is that somebody somewhere is taking advantage of Malawians on this VAT issue.

As we speak, people have already been complaining over the rise in prices of most goods and it is sad that the small constituent that utilises commercial banks for sending money to their kinsmen in the village, withdrawing cash from an Auto Teller Machine (non-banking service, they say?) is being punished some more (almost double) through the introduction of this new VAT arrangement.

Whoever it is at fault, they must realise that what they are doing to Malawians is wrong as it is akin to milking a thin cow.

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