Parliament yesterday passed taxation-r e l a t e d B i l l s which seek to facilitate implementation of various tax measures contained in the K2.2 trillion 2020/21 National Budget amid concerns from opposition that some measures are punitive.
The new measures include the K100 000 zero-tax threshold effective this month and input value added tax (VAT) on cooking oil.
The Bills, tabled in Parliament by Minister of Finance Felix Mlusu, included the Taxation (Amendment) Act and the Value Added Tax (Amendment).
T h e Ta x a t i o n (Amendment) Act contains increased withholding tax-free threshold for labourers from K15 000 to K35 000 and an introduction of 20 percent withholding tax on earnings from betting and gambling, among others.
Parliament also passed the VAT Act (Amendment) Bill that validates 16.5 percent input VAT introduced on edible cooking oil to allow manufacturers claim input VAT on their products.
While supporting the taxation amendments, immediate-past minister of Finance now Democratic Progressive Party (DPP) spokesperson on finance in Parliament Joseph Mwanamvekha described some tax measures as punitive to taxpayers.
He said: “There are very poor people out there, majority of them are youths. They are energetic, but they are not employed. Now they have resorted to betting and
getting very little. gambling for survival and they are
“Now if you apply 20 percent withholding tax on winnings then you are depriving them of economic well-being. We are saying that the K100 000 tax-free threshold should be extended to casual labourers and not only those in formal employment.”
Mwanamvekha told Parliament that neighbouring countries were not applying VAT on edible cooking oil; hence, if Malawi products are expensive due to VAT, people will resort to importing.
United Democratic Front (UDF) spokesperson on finance Lillian Patel feared the amendment will lead to the increase in cooking oil prices.
But Leader of the House Richard Chimwendo Banda, in his contribution, observed that farmers were still being exploited despite having zero VAT on edible cooking oil.
He said concerns from other members that farmers will struggle to get better prices on soya bean were misplaced because the VAT in question concerns cooking oil manufacturers who will also benefit from it as they will claim back.
In an interview, Mlusu said the Taxation Bill will empower Malawians to enjoy the taxes that have been introduced in the budget.
He said: “Malawian workers and those in informal sector such as casual labourers will be empowered in the sense that they will be getting K100 000 tax-free while casual labourers will now enjoy K35 000 tax-free up from K15 000 in the previous budget.”
Parliament also passed the Appropriation Bill to validate the legal spending of the K2.2 trillion National Budget