CfSC proposes income tax-free band increase
CfSC proposal is contained in its April basic needs basket which has also highlighted the cost of living during the month in all the four cities of the country.
The suggestion comes at a time Finance Minister Dr Ken Lipenga is this week conducting pre-budget consultations with various stakeholders across the country to solicit their input on the budget.
CfSC condition research programme officer Alex Nkosi observed in the statement that at present, the food basket stands at an average of K39 577 while the average basic needs basket comprising food and non-food items is at K69 221.
“Thus increasing the non-taxable band from [the current] K12 000 to a range between K25 000 and K40 000 would go a long way in enabling low income earners to meet their food requirements,” said Nkosi.
He, however, tipped that the money lost through the expansion of the income-tax bracket could be recouped through a negotiated social protection mechanism or by introducing a fourth bracket for high income earners.
Nkosi lamented that with the value of the kwacha depreciating “alarmingly”, the cost of living has increased way above the income levels and expectations of low and middle income Malawians.
Nkosi also stressed the need for government through its Ministry of Labour to raise the minimum wage to reflect the current situation.
On the devaluation of the kwacha, Nkosi said it will have negative inflationary impact on low income earners.
He said the market system has already devalued the kwacha, soaring the cost of living in the country.
“Will our traders increase the prices of commodities again considering that such an increase was already implemented to reflect the parallel market value of the kwacha?” he queried.
He said CfSC believes that the recent devaluation is a bold step in the right direction, but emphasised that it remains a temporary measure.
The key, according to Nkosi, still remains addressing the fundamentals of the economy which, he argued that cannot be addressed by only the resuscitation of donor support to Malawi.
On the current state of the economy, Nkosi said the seriousness of the current economic situation requires clear commitment from all sectors to come together to shape and rebuild a stronger economy that safeguards the lives of poor Malawians.
“No one entity alone can turn the economy around and every institution must move beyond their own particular interests,” he said.
According to CfSC, the ‘pre-devaluation’ cost of living survey results for April reveal that the cost of living for Lilongwe, Blantyre and Zomba went down by 4.6 percent, 4.6 percent and 6.5 percent, respectively.
