Malawi January taxes K1.9bn below target, floods blamed

At a time Malawi is under pressure to raise more money, taxes continue to underperform. In January 2015, Malawi Revenue Authority (MRA) missed the target by about K1.9 billion, a situation which if it sustains would affect the 2014/15 budget implementation.
During the review month, MRA collected K46.6 billion, missing expectations by about five percent, blaming the dismal performance on the recent floods.
“The underperformance in the month of January 2015 is on account of underperformance of import taxes due to logistical challenges, which came as a result of flooding and the damaging of the Nacala Corridor,” said the revenue collection agency.
Flood waters affected the flow of cargo into Malawi, resulting in revenue reduction from imports.

In the initial budget statement, government estimated tax revenues at K470.1 billion, about 21.1 percent over last financial year’s collection, but has up to January 2015 collected K275.36 billion, which is slightly higher than this year’s projection.
But during the Mid-year Budget Review presentation, Minister of Finance, Economic Planning and Development Goodall Gondwe proposed an extra K32 billion to the K748 billion budget, hoping for a better outturn in tax revenues and grants.
The minister said government would raise K13 billion from pledged additional grants, K8 billion from excess tax revenue while K10 billion would be borrowed locally to meet the proposed K32 billion extra budget.
But with five months to the end of the fiscal year, analysts have said the expectations, although realistic, are challenging due to the recent floods that have affected the country’s 15 districts.
Earlier, Economics Association of Malawi (Ecama) president Henry Kachaje said the achievement of the targets would require a more robust strategy that gradually increases the tax base.
But he cautioned that it will be a challenge to raise more revenue domestically, considering that many businesses might not perform well in the first quarter of this year due to the negative impact of the floods on the economic performance.
In the revenue outturn, MRA collected about K29 billion in January from income and profits, which is about six percent above the projected K27 billion.
MRA, according to the available figures, underperformed in taxes on goods and services, collecting about K14 billion, 14 percent below the monthly target.
The tax authority also underperformed on international trade by collecting about K3.1 billion, about K1.2 billion below target.