Consumers yearn for cooking oil price drop  

Consumers Association of Malawi (Cama) says it is yet to see a reduction in cooking oil prices following the removal of the 16.5 percent value added tax (VAT) with effect from April 1 2022.

But cooking oil producers say they are still waiting for government to share with them the gazetted copy of VAT  removal for them to act.

In an interview yesterday, Cama executive director John Kapito said consumers are hoping for reduced prices once the VAT (Amendment) Act is in force.  

He  said: “Cooking oil producers have played a fast one on  consumers  and we are now in a wait and see mode to see how they will handle the situation because we know and have said that VAT is least on the factors leading to the increase in prices.

“As a consumer organisation, we have been going about saying prices have gone up because of VAT, but the research and data we have from the market shows that this is not true but instead it is due to the high importation costs of crude oil which has risen on the international market.”

Meanwhile, spot-checks by Business News in the country’s major retail shops show cooking oil prices are still attracting higher prices.

For instance, a two-litre bottle of Kukoma Cooking Oil, which was  selling at K2 335 this time last year, is now selling at about K7 000.

Meanwhile, Oil Seeds Producers and Processors Association president Peter Ngoma has said the producers will respond after the VAT (Amendment) Act has been gazetted.

He said in a brief interview: “Members will immediately respond once we get the gazetted copy.”

Last month, Ministry of Trade and Industry indicated that government removed the 16.5 percent VAT on cooking oil as one of its interventions towards reducing rising prices of cooking oil.

Minister of Trade and Industry Mark Katsonga-Phiri earlier said government expects cooking oil prices to go down by at least 16.5 percent this month following the removal of the VAT.

On the other hand, Minister of Finance and Economic Affairs Sosten Gwengwe announced the removal of 16.5 percent VAT on cooking oil in his 2022/23 National Budget Statement, a move that followed a long battle between government and cooking oil producers over prices.

Last year,  cooking oil producers argued that introduction of VAT contributed to the skyrocketing cooking oil prices while government said that their claim had no basis because they were claiming input VAT, as such, consumers were supposed to be spared.

VAT on cooking oil, which was re-introduced in the 2020/21 financial year, saw cooking oil producers increasing the price of the commodity to levels consumers deemed unbearable.

This was despite assurance from the Treasury that cooking oil manufacturers would not raise prices because the tax measure would enable them to claim input VAT- tax added to the price when one purchases goods or services liable to VAT.

Taxation expert Misheck Msiska is on record sd hsving warned that expectations should not be too high on the removal of VAT on cooking oil.

He said: “What is going to happen is that the companies which were claiming input VAT will now absorb that as part of their cost. In the end the producers will have to price the products to correspond with the cost of production.”