Following the budget presentation in Parliament last week Friday by Finance Minister Goodall Gondwe, the Malawi Revenue Authority (MRA) has announced the amendments to the customs excise tariff order of some goods effective midnight May 27.
The rates include among others the introduction of 16.5 percent import VAT on newsprint, in rolls or sheets, laundry soap, ordinary bread and milk.
The government has also increased import duty from 10 percent to 25 percent on cartons, boxes, cases, bags and other packing containers of paper.
The country’s newspaper publishers fear the VAT introduction on newsprint, which is a major raw material in newspaper publication, will push the newspaper prices up.
Times Group Chief Commercial Manager Dumisani Ngulube said the VAT introduction means charging VAT on newspaper and that the cover price will have to go up by 16.5 percent.
“The result is that we are denying Malawians access to credible, balanced and insightful information. This also means we are suffocating the very supply chain of democracy,” he said.
Ngulube further said the idea of widening the tax base is good, but it must reflect first in the fiscal discipline which is non-existence at the moment.
“Let the government tighten the outflows, manage expenditure, eliminate inefficiencies rather than continue milking the already wasted cow,” said Ngulube.
Nation Publications Limited (NPL) publishers of The Nation newspaper said they are trying to get clarification from MRA as to whether the VAT extends to the cover price.
NPLs Head of Sales and Marketing MacDonald Kadewa said though the message which MRA has put forward seems straight forward, there is a need for clarification before a final decision is made by the company.
“We need to get a clear picture and our finance department is getting the clarification from MRA. Hopefully by Friday will have that picture,” he said.
However, Kadewa said if the VAT means what the institution thinks, then it means additional burden on the cash flow.
“If it means what we are thinking, then we are going to have a burden on production cost and it obviously means making information expensive to our consumers,” he said.
Commenting on the development economic experts said while the introduction of the taxes is going to hurt the poor, it is proper for the government to expand the tax band in other areas.
Zomba based economist Ben Kalua said the new taxes are meant to level the playing field.
He said some of the goods that have been taxed are consumer items that are competing with ordinary goods.
“The aim is to increase domestic production and level the play field. Why should consumers buy imported bread or milk when the same product
is produced locally?” questioned Kalua.
On newsprint VAT, he said newspapers in Malawi are for the elite and not many buy them.
“My assumption is that the government feels newspaper publishers will pass on the burden to their customers, so there is nothing wrong really. Usually people read newspapers from the office,” he said.
But Ngulube further said putting tax on newsprint will not only affect newspaper publishing houses and people’s access to information, but will also practically infringe people’s right to education since majority of Malawians will fail to buy exercise books for learners since they are also made out of newsprint.
“I hope government is aware that newsprint is also used to manufacture exercise books for primary, secondary and tertiary learners. This move will, therefore, see the price of exercise books go up, countering right to access to education to millions of learners in the country.”
Edward Chilima said the new tax measures are inevitable given the situation on the ground.
He said it is time for every Malawian to contribute somehow.
“It will hurt the rural masses but there is no other way out otherwise the government will continue taxing people that are being taxed already which is not healthy. The government had to find somewhere to expand the tax band,” said Chilima.
He, however, cautioned the authorities to put the money to good use in order to gain trust from the tax payer.
“My prayer is that the money should be put to good use and not just be squandered. The tax payer will have confidence when they see what their money has done in terms of development,” he said
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