MRA revenue four percent below target
Against a backdrop of the zero aid budget and budget support freeze, Malawi Revenue Authority (MRA) missed the August 2014 revenue target by collecting K34.6 billion, about 4.38 percent below projection.
According to the August 2014 tax outturn published last week, the public tax collector projected to collect K36.2 billion, but suffered negative variances in almost all tax categories.
According to the report, MRA collected K14.3 billion from income and profits—Pay As You Earn (Paye), corporate tax—missing the month’s projection by K0.5 billion in the tax category.
MRA also collected K16.4 billion from goods and services—value added tax (VAT) and excise—about K0.6 billion below target.
The tax authority has explained that Paye underperformed due to delayed payment from government agencies while annual salary increments for government employees have not been effected.
On VAT collections, which had a shortfall of about eight percent, MRA has explained that the authority’s refunds account had insufficient funds to pay claims, which negatively affected VAT collection as taxpayers used their liability to offset against their refund claims.
With the zero aid budget presented this month, analysts have urged the revenue authority to be more efficient to ensure that it collects more to feed into the proposed budget.
Minister of Finance, Economic Planning and Development Goodall Gondwe this month presented a proposed budget of K742.8 billion with the overall balance— expenditure less revenue and grants—at about K107.1 billion.
According to the proposed budget, government projects that total revenues and grants will amount to K635.6 billion while domestic revenues are estimated at K525.3 billion. According to Gondwe tax revenues are estimated to increase to K470.1 billion compared to K388.4 billion that was registered in the 2013/14 financial year.
However, commenting on the budget, a senior lecturer at Catholic University of Malawi James Chikavu Nyirenda said the proposed fiscal plan will be difficult to implement.
He pointed out that it is not clear where the money will come from.
On his part Gondwe presenting the budget said that tax revenues at K470.1 billion have been estimated to grow by 21.1 percent over last financial year’s collection while non-tax revenues at K55.2 billion have been estimated to grow by only 3.7 percent.
He pointed out that the growth rates are conservative when compared with growth rates of more than 35 percent in domestic revenues for the previous two years.
