Employers Consultative Association of Malawi (Ecam) says it is worried with lack of commitment from government on recovery measures for employers amid the Covid-19 pandemic.
Ecam executive director George Khaki said on Tuesday that employers are worried with lack of recovery packages and financing in the 2020/21 Budget Framework, a situation that threatens their liquidity.
He said members were hoping for some relief especially hardest hit companies to help them bounce back after the pandemic.
He said: “There are neither recovery packages nor financial assistance to companies. That is likely to affect recovery for many employers. We are also worried on financing of the budget. Borrowing to finance the budget will crowd out finances that companies may need to borrow and likely to raise the cost of financing.
“We are also not happy that the budget is making a few privileged public officers not to contribute their fair share to the government kitty by exempting them from tax obligations.”
In March, Ecama wrote Chief Secretary to Government and Cabinet, secretaries for Ministry of Labour, Skills and Innovation, Disaster Preparedness and Management, Treasury, Health, Trade and Industry and chief executive officer for Malawi Confederation of Chambers of Commerce and Industry (MCCCI) asking them to consider reviewing tax and other policy measures in the fight against Covid-19 for business survival.
The association wanted government to find ways and means of compensating employees and suspend Pay As You Earn (Paye) to reduce liquidity burden on employers and enable payment of wages.
However, Minister of Finance, Economic Planning and Development Joseph Mwanamvekha said in his 2020/21 Budget Statement that unlike other economies that have surplus budgets and can afford bailouts and expansionary policies through stimulus packages, Malawi has not yet attained the luxury of operating a surplus budget to afford bailouts.
This, he said, is despite treasury introducing tax revenue measures to enhance revenues whilst ensuring that a conducive environment is created for businesses to recover and provide some cushion to individuals.
“Resources allowing, government would have been able to provide such support but as honourable members are aware, the Malawi Government has been operating deficit budgets for many years,” he said.
Despite receiving several proposals regarding value added tax, most of which were to do with reduction in standard rate, exemptions and zero rating for VAT, Treasury has not implimented any during the 2020/2021 fiscal year due to their negative impact on the revenues, which have already been affected by the Covid-19 pandemic.
Treasury figures indicate that average monthly tax revenue has declined by 35 percent from K90.8 billion during pre-Covid-19 period to K59.1 billion during the Covid-19 period.