MRA talks Kwacha devaluation effects
Beats April 2022 target by K5.88 billion
Malawi Revenue Authority (MRA) Commissioner General John Biziwick has downplayed fears of a possible squeeze in government revenue in the aftermath of the 25 percent Kwacha devaluation.
Biziwick was speaking during a media interaction in Blantyre, where he also outlined revenue growth strategies the authority intends to deploy this year.
He said while devaluation might, in the interim, affect the economy; in the medium term, businesses should expect the situation to be better off.
“The devaluation entails the realignment of the exchange rate. When you look at the level of the exchange rate now, it is what it was at the black market. Immediately, it should be able to assist businesses because forex may be available.
“In fact, it means that value for duty purpose will be higher; so we should be able to get more [revenue]. This means that there will be more imports, which means more taxes for us,” Biziwick said.
When making his presentation, Biziwick remained upbeat that the revenue collection body will likely beat the K1.636 trillion revenue target for the 2022-23 Financial Year.
Figures he presented show that, in April 2022, which is the first month of the financial year, tax revenue collections amounted to K130.46 billion against a target of K124.57 billion, thereby exceeding the target by K5.88 billion.
The performance translates to a nominal growth of 22.3 percent compared to the K106.65 collected in April 2021.
This comes after the revenue collection body missed its 2021-22 annual revenue target by about K73.4 billion.
In the year, MRA collected about K59.6 billion against an revenue target of K1.033 trillion.
However, the authority registred a performance rate of 92.87 percent, according to Biziwick, and a nominal growth of 19 percent compared to the same time the previous financial year.
Partly, the low revenue is attributed to policy changes in the Pay As You Earn middle bracket from 30 percent to 25 percent, lagged effects of Covid, shortage of forex, global increase in prices, delayed implementation of some measures and delayed payments by MDAs.
Meanwhile, MRA has moved to widen its tax net by, among other things, rolling out the block management system, advance income tax, presumptive tax and introduction of electronic tax stamps, according to Biziwick.
“We are moving to promote a fair tax system where the tax burden is widely shared among the citizenry and pressure is reduced. This means increased revenue for government to implement development projects and it gives room for government to lower tax rates,” he said.