Malawi Revenue Authority (MRA) has expressed confidence that it will beat the projected K1.116 trillion tax revenue target set in the K2.2 trillion 2020/21 National Budget.
However, experts have downplayed such confidence, saying it remains a tall order given the impact of the Covid-19 pandemic that is ravaging all sectors of the economy, leading to reduced revenue.
MRA commissioner general John Biziwick made the assurance when he and his management appeared before the Budget and Finance Committee cluster of Parliament in relation to the 2020/21 National Budget, which is under scrutiny in clusters of Parliamentary committees.
He said they are optimistic of meeting the target set in the budget buoyed by reforms that will be implemented to enhance revenue collection.
Said Biziwick: “MRA allocations remain different from other public institutions because the allocation is not imposed on us. The budget was prepared by us with focus on priority areas which we want to achieve.
“I am sure we will to meet our targets. I am a positive person together with my team. Covid-19 is the main issue that affected us in the past months because our officers could not go out to enforce tax measures and trade was affected and with borders closed, we couldn’t get revenue.”
Among the reforms outlined by Minister of Finance Felix Mlusu in the budget statement include widening of the tax base to reach out to the informal sector with a strategy to mobilise and entice them into cooperatives.
Biziwick said MRA plans to buy drones from South Africa to enhance border patrol and surveillance to curb smuggling of goods into the country, which is leading to loss of revenue on cross-border trade.
The budget is drawing mixed reactions from stakeholders and an assurance from MRA to beat the target begs questions on how it will be attained in view of the economic situation.
Already, the budget is projecting a fiscal deficit of K754.8 billion, one of the highest in recent history, which is expected to be financed by foreign borrowing amounting to K224.8 billion and K530.1 billion from domestic borrowing.
Mlusu admitted in the budget statement that the just-ended financial year had 11 percent revenue under performance owing to poor business environment exacerbated by Covid-19.
While expressing skepticism on meeting the revenue target, Budget and Finance Committee of Parliament chairperson Gladys Ganda said: “The targets are too ambitious. If you see the trends between 2014 up to now, you will see that the targets are reducing and MRA has been missing the targets, which would be the same this time around.”
Economic experts have characterise the 2020/21 fiscal plan as consumptive with wages and salaries alone allocated K523.7 billion, which is 7.3 percent of GDP.