At a time when Malawi is struggling to execute a budget solely dependent on domestic tax revenue, both the Financial Intelligence Unit (FIU) and the Malawi Revenue Authority (MRA) have confirmed a rise in cases of tax evasion which are eating into the resource envelope.
While indicating that it is implementing strategies to ensure that all eligible tax payers remit taxes due to the authority, MRA Deputy Director of Corporate Affairs, Steve Kapoloma, however said challenges still remain.
But the Malawi Economic Justice Network (Mejn) has called for quick action to seal loopholes in revenue collection as one way of broadening the tax base.
Mejn Executive Director, Dalitso Kubalasa, was commenting on the positive outturn registered by MRA in the past three months which has seen the authority beating its revenue targets.
T he positive outturn, however, comes after continued slippages registered at the end of the 2015/16 fiscal year.
In an interview, Kubalasa said the country has ability to broaden its tax scope if it is to effectively deal with prevailing tax evasion and avoidance.
He said the countr y has been experiencing a squeeze in domestic resource mobilisation drive due to the existing gaps through which resources meant to be generated as tax and other revenues have been leaking.
“There are still a number of challenges surrounding the fiscal space and the domestic revenue mobilisation. If we are able to generate the revenues as expected and deal with tax evasion and avoidance, we would be better positioned to fund the budget,” said Kubalasa.
According to Kubalasa, the comprehensive tax reviews would help address the prevailing concerns when adopted.
He said the nation needs to adopt radical reforms to cover the existent tax collection gaps.
“We will be following to see what reforms are created to deal with the tax evasion and avoidance as a means towards broadening the fiscal space. This will help the country avoid continued borrowing, and then we will see a change,” said Kubalasa.