When taxes extend to funeral messages
In case the Minister of Finance Goodall Gondwe does not know, text messages are so basic and are widely used by cellphone users as an alternative and cheaper way of communication to telephone calls.
With a text message, communication is simple and straight forward and is based on a fixed and well known rate unlike a telephone call where one can end up talking more than the intended message, thereby incurring more and unplanned costs.
People use text messages to spread messages about funerals, sicknesses, wedding and other important family, personal and community messages.
While some urban and higher income cellphone users have migrated to more sophisticated forms of communication such as WhatsApp, Facebook, Twitter and e-mail, rural and low income people, who can’t afford smart phones still use text messages as a basic form of communication.
The Ministerof Finance may also wish to know that the internet is no longer a luxury service that is only available to the rich and companies. Many ordinary Malawians now own smartphones that can access the internet.
The youth and most urban dwellers are now able to easily access the internet and get information on education, health and businesses because of smartphones and basic internet services being provided by mobile phone companies.
The introduction of a 10 percent excise tax on text messages and internet services in the forthcoming budget by Minister of Finance Goodall Gondwe is a classic example of a misplaced new tax measure.
What is even more amazing is that in the same budget, the government has decided to reduceduty on expensive vehicles with engine sizes beyond 3,000cc.
One wonders what justification the Minister of Finance has to introduce a tax on text message and internet service while providing tax relief on luxurious vehicles.
The tax on SMS and internet services can be likened to the kind of taxes that were introduced in 2011 by the government when it introduced the infamous Zero- Deficit Budget after donors withdrew aid to the country over governance concerns.
This was when we witnessed crazy taxes being introduced on basic goods and services such as offals, milk, salt and water. The development could have added to the anger among the people that saw thousands of people taking to the street in July 2011 to protest against various political and economic problems that hit the country at that time.
It is an undisputed fact that the continued absence of donor aid in the budget will require the government to generate increased resources locally to finance the budget.
Taxes are the primary source of government revenue and ordinarily, increasing taxes isthe most practical way in which government can generate more funding locally for government operations and activities.
But there are better of ways of increasing government revenue other than introducing taxes on basic goods and services, especially those used by the poor and middle income citizens.
The first step government has to take is to improve efficiency and effectiveness in the usage of tax payer resources, to ensure that the little that is collected through taxes and import due is put to good use in government operations.
It is a well known fact that there is a lot of wastage and theft in the usage of government resources. Strict enforcement of public financial management regulations could go a long way in ensuring that the Minister of Finance has adequate resources for allocation to essential and priority government services in the budget.
The government also has to improve the tax collection administration at the Malawi Revenue Authority.
Through MRA,the government also has to increase tax compliance among would-be tax payers to ensure that everybody who is supposed to pay taxes lives up to their obligation.
There is alot of tax evasion in the country that is denying the government billions of kwacha in would have been revenue. A lot of revenue can be generated through enforcement of tax compliance that can be used to cover the resource gaps created by the withdrawn donor aid in the budget.
Even if new taxes were to be introduced, basic goods and services should be spared while luxurious things like large vehicles should be targeted.
It is also time that the president, ministers and members of Parliament sacrificed some o ftheir privileges such as duty free importation of vehicles to share with the ordinary people, the suffering they are going through as a result of donor aid suspension.
It clearly does not make sense for an “honourable” politician to enjoy tax free goods and services while ordinary people are being taxed for simply sending a text message about a funeral to friends and relatives or searching Google for information on some ailment on their mobile phone. Thumbs Down Mr. Minister of Finance.
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