Honourable Folks, the 2013 budget is amazing. Government’s spending has been projected to rise by over 50 percent but it hasn’t asked for an extra tambala from the tax-payer!
Instead, it has extended the zero percent Paye tax bracket from K15 000 to K20 000; removed some taxes on matches, bottled water and some capital equipment and, more importantly, allocated a whopping K60.1 billion to farm input subsidy (Fisp) with an assurance that the beneficiaries—villagers who make up the majority of the electorate—will continue buying a 50 kg bag of fertiliser at K500.
When the former president Bingu wa Mutharika was introducing that kind of subsidy, a 50 kg bag of fertiliser was selling at a commercial price of about K5 000. Now, it’s at about K15 000, but the subsidised price hasn’t changed an iota.
Pity that such an irrational subsidy is targeted at only 1.5 million in a country of about 15 million people, over 50 percent
of whom live in extreme poverty. How government will fairly and objectively choose between two villagers in abject poverty, which one to support or leave in the wind shall probably remain a puzzle to be conveniently ignored by the champions of targeted subsidy.
Ironically, a government that puts a tenth of the National Budget in a high risk, rain-dependent investment whose beneficiaries are failing to graduate from dependency to self-sufficiency—always looking to government for support in both production and consumption—now blames us all of developing a sweet tooth for subsidies.
Finance Minister Ken Lipenga was at his element on May 24, saying we look to government to heavily subsidise everything—education, water, electricity, medical services, etc. Well, where on earth does government use taxpayers’ money to provide public goods and services at a commercial rate?
Rather than blaming poorly paid but heavily taxed
Malawians who end up spending half their incomes on utilities such as water and electricity, government should put our problems in context and accept that citizens here are victims of five decades of mediocrity by our political leaders.
Lipenga should realise that it is the same people in extreme poverty who can’t do without subsidies in education, health, etc. Those who suffer heavy Paye deductions send their children to private schools and go to private hospitals when they are unwell.
They are also the ones who pay huge tariffs for extremely poor services by Escom and water boards. They also suffer the pangs of monthly fuel hikes. These are salaried people whose income has greatly diminished as a price for government mistakes.
Politicians in government have all along have failed to reform the civil service and parastatals, turning them into robust and efficient tools for the delivery of goods and service to the public. Instead, our taxes have been used to run
an inefficient, larger-than-the-economy public sector that’s highly politicised.
The result is that neither government nor its statutory corporations have the capacity to even maintain the levels of goods and service delivery they had way back in the 1970s. They are losing it daily and they only survive because they thrive on the money they squeeze from citizens and donors. If any of our presidents since Kamuzu Banda had been a CEO of a company called Malawi Government Limited, it would have died.
Which is why a year before attaining our 50th anniversary as an independent sovereign State, our budget can’t balance even after donors have increased their aid from 30 to 41 percent. Seven years ago, donors forgave much of our foreign aid but we are back to heavy borrowing and this year alone, government will impose on our children a burden of K42 billion foreign debt!
Reason? The budget still had to be overstretched so it could provide the President and her deputy with plenty
resources for local and foreign travel in a campaign year? Why on earth should a reasonable government, which believes in removing subsidies for its citizens, use taxpayers’ money to subsidise the PP campaign budget, in a year of austerity for that matter?
The problem is that such issues may be a concern for lesser mortals such as Cama’s John Kapito whose views don’t seem to matter. Our government listens more to donors whose interest right now is in reforms, the removal of subsidies to be precise.
As long as the JB administration is ready and willing to do that, it is assured of the donor vote of confidence which this year has been manifested in the 11 percentage point increase in aid. Such windfall has raised the barrier of entry into the State House for the opposition which, barely a year to elections, is still waffling on strategy and policy.