By Wezzie Gausi:
The Malawi Revenue Authority (MRA) has registered a 23 percent decline in tax revenue in May 2024, figures have shown.
The figures, which The Daily Times has seen, show that in May, MRA collected K192.128 billion as compared to K251.724 billion collected in April this year.
The May collection is K51.4 billion shy of the K243.79 billion target that the Treasury gave MRA.
The underperformance in tax revenue in May comes a month after the tax collector managed to beat its April 2024 target of K249.554 billion by K2.2 billion—when it collected K251.72 billion.
The May 2024 collection is, however, 28 percent better than the K150.068 billion collected in May 2023.
MRA Commissioner General John Bizwick said Wednesday that the tax collector has been having a bullish performance in the first months of the year 2024.
Among other things, the MRA chief said the tax collector shocked the country when it achieved a K2 trillion tax revenue collection milestone from April 2023 to February 2024.
“Let me refer you to Steve Kapoloma [MRA Head of Corporate Affairs] to give you all the information that you need,” Bizwick said.
Commenting on the development, Blantyre-based economist Mervin Banda said considering that the fiscal space continues to face constraints, it is imperative that MRA matches revenue projections with collections.
He said especially considering that tax revenues have, in recent years, represented greater than 92 percent of the revenue collection base, it falls upon citizens and government alike to collaborate in order to ensure that revenue collection compliance reduces leakages that may retard the process.
“Going forward, the nation needs to diversify its revenue base in order to boost non-tax revenues.
“For an economy that is constantly experiencing shocks, it remains imperative that resilient resource generative initiatives be introduced at the pace prescribed in the Domestic Revenue Mobilisation Strategy for 2021 to 2026,” Banda said.
Scotland-based Malawian economist Velli Nyirongo said a more granular breakdown by tax category would be particularly insightful.
He said shortfalls in import duties, for example, could signal a slowdown in specific sectors that rely heavily on imports.
“Conversely, lower income tax collection might point to issues with either tax collection methods or a decrease in overall business activity.
“This aligns with the recent downgrade in Malawi’s 2024 economic growth projections, suggesting a general softening of economic activity.
“However, there may be some short-term respite in the coming months, which often coincide with peak economic activity and the crucial tobacco harvest season,” Nyirongo said.
In March, MRA told reporters in Blantyre that it had exceeded the set target of K1.981 trillion by a significant K20.95 billion, which was representing an outstanding 101.1 percent revenue performance and remarkable 41.52 percent growth from April 2023 to February 2024.
Finance Minister Simplex Chithyola Banda announced domestic tax collection targets for MRA when he presented the 2024-25 budget policy statement.
