The Budget and Finance Committee of Parliament has asked the Minister of Finance, Economic Planning and Development Goodall Gondwe to bundle the so-called ‘Super Executives’ into their own tax bracket and increase their tax rate instead of just complaining loudly.
In his 2016/17 budget statement, Gondwe said the payment of what he described as ‘Western-style bonuses’ to top executives in the private sector must be a major concern to government, because it entails a waste of resources that could have been re-invested productively.
But in his speech following an intense two-week consideration of the budget, the committee Chairperson, Rhino Chiphiko, said while the minister suggested that these are unethical, the committee failed to appreciate the economic argument.
“More importantly, the Minister has no grounds to complain. If the Minister of Finance notices something that threatens our economy, he is empowered by legislation to propose measures to obviate, remedy or mitigate the deleterious impacts of that development. The Committee, therefore, while empathising with him, also find his lamentation lacking in a way forward,” Chiphiko said.
Gondwe also said the system also worsens income inequalities, and creates disincentives in other equally important sectors of the economy.
“The practice, in some companies, to pay salaries equal to those received by executives in developed countries and grant them huge perks should be roundly questioned, just as it was questioned in those countries in the wake of the 2008 economic meltdown.
“Surely, salaries equivalent to US20,000 [about K14 million] per month or more in Malawi cannot be conducive to the needed investments nor to continued social harmony,” Gondwe told Parliament.
But Malawi Confederation of Chambers of Commerce and Industry (MCCCI) already defended the salaries and bonuses that are paid to some people in the private sector with an argument that they are in accordance with the Companies Act and business practices in the country.
On the national registration programme, Chiphiko said the Committee does not understand why such a nationally important activity has to await donor funding.
Gondwe said the total budget for the National Identity Cards Project is estimated at US$51.2 million (about K35 billion) almost 70 percent of which is required within the 2016/17 and 2017/18 fiscal years with the hope that development partners will support part of it.
But Chiphiko said if the country was serious the project could have been funded from domestic resources.
“In addition, Mr Speaker, the Committee needs assurance that during the registration process the authorities will separate Malawians from non-Malawians since we have noted with regret, how non- Malawians have easily accessed the Malawian Passport and driver’s licence without any problems,” he said.
The Committee, however, has welcomed the priority attached to agriculture as manifested in the increase in the allocation to the Ministry of Agriculture, Irrigation and Water Development which has increased by 46 percent from K133 billion to K198.5 billion.
“It is heartening that in a year of food deficits, uncertainty in the weather conditions, Agriculture, Irrigation and Water Development has the largest allocation accounting for 17 percent of the budget.
“The Committee also appreciates the allocation to Ministry of Education Science and Technology, which is K147 million, representing 13 percent of the budget,” Chiphiko said.
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