Malawi Revenue Authority (MRA) has continued on its underperformance path with latest figures showing a negative tax revenue variance of K1.8 billion (about $2.8million) in March 2016, a development that will likely strain the country’s national budget.
But economists yesterday argued that the trend will likely continue unless the country widens its tax base to include businesses in the informal sector.
Economic commentator Nelson Mkandawire, in an interview on Thursday, said it is about time the country finds other means of generating income.
MRA revenue performance report for March 2016 shows the tax bull collected K43.5 billion in March 2016 against the projection of K45.3 billion.
The March revenue is, however, lower than K44.2 billion collected in February 2016.
Mkandawire exonerated MRA, saying it is not entirely to blame for its underperformance, arguing the current economic position has left businesses with little or no breathing space.
“It should not be surprising that MRA continues to miss targets. Most businesses are not performing to their expectations as the economy itself is not in good shape.
“Malawi has a thin tax base especially because there is a large informal sector; hence, people should not be surprised if the public tax collector continues to miss its target,” he said.
Weighing in on the same, executive director Economics Association of Malawi (Ecama) Edward Chilima also observed that the current economic situation could be hindering MRA’s performance.
He said their targets are not practical, arguing that the country should consider expanding the tax base.
Chilima said there is need to tighten expenditure, adding that government should ensure it lives within its means.
The published performance report tax stated that Malawi’s tax revenue collected during the 2015/16 financial year to date amounted to K 416.9 billion against a projection of K427.9 billion, representing a 97 percent collection.
The report also shows that income and profits fell short of its target, collecting K21.3 billion against a projection of K22.09 billion, representing 96.4 percent of the target, largely on account of non-resident taxes.
Pay As You Earn (Paye) also registered a deficit, collecting K13.9 billion against a monthly projection of K16.3 billion due to delays in remittances by some government institutions.
MRA commissioner general Tom Malata earlier said the tax collecting agency will this year employ new strategies to widen the tax base to boost tax collection by enforcing usage of Electronic Fiscal Devices. n