Malawi Revenue Authority (MRA) missed its August 2017 revenue projection target of K71.04 billion, collecting K63.42 billion which is K7.6 billion less, according to published revenue performance figures.
MRA has attributed the subdued performance to weak collections in provisional tax, domestic excise and trade taxes and the expected reduction in profits from business due to the power outages.
Cumulatively, total tax revenues collected during the 2017/18 financial year to-date amounted to K136.34 billion, against a projection of K145.40 billion, representing a negative variance of seven percent.
During the review period, only fringe benefits tax (FBT) and non-resident tax (NRT) overperformed by 45 percent, collecting K1.13 billion against its monthly projection of K777.29 million.
On the other hand, income and profit taxes, pay as you earn (Paye), corporate tax, goods and services, value added tax (VAT) and excise duty underperformed.
For instance, income and profits fell short by 16 percent, collecting K26.17 billion, Paye underperformed by 18 percent collecting K16.42 billion, corporate tax on the other hand a deficit of 14 percent collecting K2.6 billion while excise duty fell short by eight percent collecting K6.37 billion.
In July, which is the start of the 2017/18 financial year, MRA collected K72.92 billion against a monthly projection of K74.36 billion, missing its target by two percent.
In an interview yesterday, Malawi Confederation of Chambers of Commerce and Industry (MCCCI) president Karl Chokotho said reduced production by industries in the face of electricity outages entails reduced volumes available for sales and reduced revenue which translates into reduced tax revenue.
“Industry requires electricity for production, from SMEs [small and medium enterprises] to large factories. Some industries have deployed alternate power sources which are more expensive than electricity such as generators which increases operating costs and reduces profit and tax revenue.
“Unless there are drastic changes in the supply of electricity, we should brace for reduced tax revenue which will ultimately affect public service delivery,” he said.
Chokotho said another scenario is that when power is back, it does not mean that machines will make up for the lost time.
“Production lost during outages is production lost completely unless there is an alternative source of power being used,” he said.
The shortfall in power supply, which is currently at 90 megawatts has been attributed to the continued decrease in water levels in Lake Malawi, which feeds into Shire River, where 90 percent of hydropower is generated. n