Government has introduced a zero deficit budget and, as a result, it has imposed different taxes on different goods and services.
Other goods that have also been taxed include water supply, ordinary bread, meat and edible meat offal, milk and dairy products, residues and waste from food industries, saw dust and wood waste, hessian cloth, machinery and mechanical appliances and spare parts, and fees, charges, commissions, and discounts on financial services.
Managing director of Blantyre Print and Packaging (BP&P), Leonard Chikadya questioned the tax imposed on newspapers. BP&P owns Blantyre Newspapers Limited (BNL) which publishes The Daily Times, evening Weekend Times, Saturday Malawi News, Sunday Times and a quarterly magazine Times Lifestyle. Chikadya said they have been struggling with circulation and the newspapers are part of essentials on access to information.
"My concern is when we have tax on bread, newspapers, dairy products which are basic essentials. This is a price we have to pay for the lost revenue from donor funding," he said.
The finance minister dismissed the reasoning that it is the zero budget deficit that has forced government to introduce the taxes. Kandodo said the VAT measures are due to regional integration commitments under SADC and COMESA.
"Trade taxes are being phased out and governments have now to increasingly rely on domestic taxes such as VAT since trade taxes will no longer be a significant source of revenue," he said.
Kandodo said it is therefore, inevitable and best practice that VAT, which is considered as the primary future tax should be simple and clean, in terms of rates and exemptions.
Kandodo said in order to remove distortions in the VAT structure, operations and transactions, there is need to introduce VAT on various goods that were previously exempt but said some of the transactions in the financial sector such as banking and life insurance services will continue to be VAT-exempt.
"However, it should be noted that the banking sector may not claim their input VAT," he said adding that on the other hand medical machinery which will remain VAT-exempt.
Kandodo explained that the net impact of introducing 16.5% VAT on the above mentioned exempt items is that the price would in effect go down because most registered VAT operators will now be able to claim input VAT which was previously a cost to their business.
He appealed to the Consumer Association of Malawi (CAMA) as well as other regulatory institutions to assist government in ensuring that traders do not take advantage of this measure to raise prices.
CAMA questioned the government action to burden the consumers with taxes due to its failure to make amends with donors who are demanding good governance for things to return to normal.
"The consumers in Malawi are already taken advantage of," said CAMA executive director John Kapito.
Commenting on the taxes on newspapers, chairperson of the Parliamentary Committee on Media Kondwani Nakhumwa asked government to exclude newspapers on the tax imposed. Nakhumwa, who is ruling Democratic Progressive Party (DPP) legislator for Mulanje Central constituency, took government to task over matter in his contribution to this year national budget.
"I wished there were tax waivers on transmitting equipment, and newspapers if the country's media is to be promoted," he said.
Nakhumwa however supported the zero-deficit budget, asking Malawians to desist from becoming afraid of whatever government wants to implement.
