Expectedly, the issue of taxes has loomed large during the Pre-budget Consultation Meetings Minister of Finance, Economic Planning and Decentralisation Joseph Mwanamvekha concluded yesterday. Taxes are unavoidable as Benjamin Franklin, an inventor, publisher, author and one of the founding fathers of the United States of America aptly said: “In this world, nothing can be said to be certain, except death and taxes.” Even in the days of Jesus over 2 000 years ago people paid taxes and some still grumbled. In one incident highlighted in Matthew 22 verses 15 to 22 in the New Testament of the Holy Bible, the Pharisees and Herodians, apparently fed up with the Roman Empire tax system, set out to corner Jesus by asking Him: Is it lawful to pay taxes to the emperor or not?” In his response, Jesus was philosophical as He often did, stating: “Why are you putting me to the test, you hypocrites?
Show me the coin used for the tax.” They handed him a denarius bearing the portrait of the emperor and He told them: “Give, therefore, to the emperor the things that are the emperor’s, and to God the things that are God’s.” In other versions, the quotation reads “give to Caesar what belongs to Caesar and give to God what belongs to God”. From the above Biblical illustration, it is clear that from time immemorial, earthly governments have used taxes to finance the services they provide to the citizenry. It is taxes that finance construction of roads, schools, hospitals, purchase of medicines and other social services.
It goes without saying, therefore, that without taxes, there will be no farm input subsidies, social protection initiatives and even good road network, schools, hospitals and other services. Malawi is reeling under a heavy public debt estimated at K22 trillion with 65 percent of it domestic. The World Bank projects that the country’s debt has exceeded 90 percent of the gross domestic product, which is the highest since the pre-Heavily Indebted Poor Countries (Hipc) era in 2006.
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Debt servicing takes up about 40 percent of Malawi’s already dwindling domestic revenue which is projected at K4.4 trillion in this fiscal year ending on March 31 2026. During the three-leg consultations held in Lilongwe, Mzuzu and finally in Blantyre yesterday, the minister highlighted several tax proposals, including taxing non-resident Malawians, taxation of fringe benefits and pension receipts as ordinary income as well as introduction of inheritance income. These proposals, if approved by Parliament and included in the ministers 2026/27 National Budget, will come over and above increases in taxes such as value-added tax (VAT), Pay As You Earn thresholds that introduced a 40 percent bracket and taxes on “super profits” during the Mid-Year Budget Review.
Mwanamvekha has no option but to continue milking the same already thin cow. During the Lilongwe leg of the Pre-budget Consultation Meetings, the minister said reversing the tax decisions and new proposals is a “bitter pill” Malawians have to swallow. This statement would make more sense if the taxes were justly and fairly levied on the people, not in an environment where the gospel of “expanding the tax base” as preached by Mwanamvekha and his predecessors over the years ends up targeting the very same people while give relief to a chosen few in the public sector despite the fact that they can afford the taxes.
Why should ordinary Malawians continue to be burdened with taxes when the Presidency, Cabinet ministers, legislators, judges and other public officers continue to enjoy duty-free status and tax exemptions? Truth be told, the senior public officers, including the Presidency, have the capacity to pay taxes. They also have the capacity to pay duty on imports such as motor vehicles.
Is it fair to tax a peasant for a purchase of some grains of salt when a senior public officer importing a K400 million worth SUV is exempted? The proposed inheritance tax also needs a rethink as it has the potential to create a scenario of double taxation and, as one senior lawyer often argues, making “the Malawi Government the biggest deceased property grabber” given that already a deceased estate with gross value of K20 million attracts 11 percent duty. Now if you add inheritance tax of say 30 percent on the deceased estate, it would mean 41 percent going to the government.
Surely, that would be a disincentive for Malawians to accumulate wealth through savings and making serious investments. If Malawi is to come out of the economic doldrums, the leadership must lead by example by paying taxes, including duty on imports. The austerity measures the Office of the President and Cabinet announced in October last year which saw fuel allocations for public servants, including Cabinet ministers cut by 30 percent are a good starting point.
Perhaps, it is worth reminding the Minister of Finance that apart from taxes, sealing loopholes in the spending of public funds could also help to bring value to public service delivery. It is estimated that between 25 and 30 percent of public resources Parliament approves in the National Budget are lost through misprocurement and corruption, tightening the screws in this area can go a long way in fattening the government’s wallet as resources will now be used for their intended purpose, not going into individuals’ pockets. It is, thus, my sincere hope that the forthcoming budget will resonate with the wishes of the public.
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