Government has hit back at its critics by saying it has the capacity to fund and implement activities in the proposed K1.7 trillion 2019-2020 financial year budget.
Reacting to the skepticism some quarters have expressed whether Government is realistic with the proposed budget, Ministry of Finance and Economic Planning spokesperson, Davis Sado, said the capacity is there to meet the targets on projected revenue and grants.
“Malawi Revenue Authority has been challenged to ensure that there’s tax compliance so that we are not losing out tax revenue. We have also carefully analysed how we can widen the tax base without inflicting hardship on Malawians,” said Sado.
Government is also banking on the proposed user fees and charges which will boost domestic revenue.
He said the revenue policy measures in the new budget seek to strengthen domestic resource mobilization and management of the same.
Sado parried away assertions that the fiscal plan is not scrutinized monthly saying there’s a fully fledged division mandated to monitor and evaluate budget implementation.
However some economic experts have argued that there’s high probability of revising down the budget during mid year review as is the case every year. They observe that the assumption that revenue and grants will increase by 26.1 percent from the 2018/19 approved amount of K1.3 trillion is quite daring.
Some of the tax measures proposed in the budget include introduction of carbon tax on vehicles ranging from K4, 000 to K11, 500 per year, Introduction of one percent withholding tax on non bank mobile money transactions based on transaction amount and hiking of rental income tax from 15 percent to 20 percent.
The projected deficit amounting to K155.9 billion is expected to be financed by domestic borrowing amounting to K46.1 billion and net foreign borrowing of K109.7 billion.