Cama, tax experts hail Treasury on carbon tax

Consumers Association of Malawi (Cama) and tax experts have commended Treasury for modifying how motorists should be paying carbon tax, saying it remains within the spirit of broadening tax base.

The move, according to Cama and tax experts, will compel those who only pass through Malawi to be paying carbon tax when refuelling.

This is unlike an earlier arrangement in which carbon tax was being paid when renewing certificate of fitness (CoF).

In a written response, Cama executive director John Kapito said by transferring the tax to the petrol pump, Treasury has broadened the tax base.

He said: “Governments have an obligation to provide social services to their people and the only way is through the introduction and continuous collection of taxes.

“The challenge that consumers have is to hold those responsible accountable. We must be given or demand information on how our taxes are used.”

In the 2019/20 National Budget, government introduced carbon tax with a directive that motorists will be paying when renewing CoF.

However, in the 2020/21 proposed National Budget presented two weeks ago in Lilongwe, Minister of Finance, Economic Planning and Development Joseph Mwanamvekha said motorists will be paying carbon tax at K5 per litre when refuelling at a filling station.

He said: “Foreign registered motor vehicles under temporary import permit or transit will still be required to pay carbon tax at the point of entry based on engine capacity.

“Government has consulted Mera [Malawi Energy Regulatory Authority] and has been assured that this measure will not lead to an increase in fuel prices and government will be closely monitoring the situation.”

Tax expert Emmanuel Kaluluma said for those who already paid for their annual carbon tax through CoF, they will lose out and pay more, adding that the challenge remains that tax measures are aligned to the government fiscal year which begins on July 1.

Another tax expert Misheck Msiska described the modification of the said tax as unfair for those that have already paid upon renewal of CoF.

Carbon tax, being newly introduced, remains a contentious issue in the country as environmental experts demand that it should be ploughed back to conserve the environment than current situation when government uses the funds for general purposes.