Finance Minister Simplex Chithyola-Banda has challenged the Malawi Revenue Authority (MRA) to triple its tax revenue collections in a bid to aid the government meet its expenditure needs.
This follows a familiarisation tour that the minister had of the Msonkho House in Blantyre on Tuesday.
Currently, MRA collects on average K150 billion a month in tax revenues, translating to K450 billion a month, if the tax collector is to meet the minister’s ambitious target.
In an interview, Chithyola Banda said people should know that there is potential at MRA and it can collect more than it is currently doing.
He said all that is needed is to simply strengthen and enhance collection measures.
- Advertisement -
“We need to expand the tax base. For example, we need every business to start using the Electronic Fiscal Devices (EFD) because that guarantees the tax we are to get from such businesses and ensures they have a bank account so that we are also able to consolidate their tax and business figures.
“We also need to employ radical measures to make sure that nobody evades tax so we want to do things differently. Let me also appeal to Malawians to be tax compliant. My ministry will help the MRA to make sure that everyone who evades tax is taken to book,” Chithyola Banda said.
He added that he was impressed with how the MRA is managing its systems, highlighting the recent upgrade on the Ascuda World, the system it uses to manage customs and progress on the Msonkho Online where tax payers can interact with the Authority at their comfort.
MRA Commissioner General John Biziwick said the target is realistic considering the potential that the Authority has.
- Advertisement -
- Advertisement -
However, he was quick to indicate that it can be achieved in the medium term.
“I am sure he did not say tripling the target this year but he is talking tripling after we implement certain reforms and we can achieve that once we implement these reforms. We are looking at full implementation of the Msonkho Online, that is our integrated tax administration system which will look at a tax payer with a bird’s eye view. We will be looking at the tax payer in terms of all the taxes not just one tax. This will help us manage compliance for each tax payer.
“One of the challenges is that we are using several systems to manage the tax payer and these systems are not talking to each other. In general, the perception is such that people do not want to be tax compliant. In most countries people rush to be tax compliant but here in Malawi it is a different situation all together,” Biziwick said.
He added that tax collection performance has been mixed due to the impact of the economic performance on businesses.
“Tax is an output from the business activities in the economy so because the economy is not performing all that well, you find that there have been lower taxes but as you are aware sometimes some sectors may underperform while others are thriving. For example, recently I talked about the banking sector doing well in tax contributions and you saw Illovo giving us a cheque publicly of their contribution so while other sectors are affected some sectors are doing okay,” Biziwick said.
In an interview, tax expert Emmanuel Kaluluma said it was possible given enhanced efficiency and eradication of corruption at the Authority.
“We should aim high and that is how we should look at what the minister is saying. There are things that they can do which they are not doing and can make a difference. I have correspondence which has been over five months not responded to. Let us assume that it will result in revenue. So, the minister is correct, they need to be more efficient.
“We will be naïve to think that there is a government department where corruption doesn’t exist and, therefore, we must get rid of that and in the end, they will be able to meet the ministers target,” Kaluluma said.
The MRA has been bragging about beating its targets in recent quarterly tax collection updates.
