Human Rights Defenders Coalition (HRDC) has expressed concern over what it terms “a series of economic and governance decisions” that are rapidly worsening the living conditions of ordinary Malawians. In a six-page statement, HRDC chairperson Michael Kaiyatsa mentioned new tax measures and rising cost of living, redeployment of senior public officers and omission of a dedicated budget for the Office of the Second Vice-President as concerns. On taxes, Kaiyatsa said although government has increased the zero-rated Pay as you earn (Paye) threshold from K150 000 to K170 000, the relief is neutralised by the removal of the 25 percent bracket and introduction of 30 percent minimum tax rate.
He said: “Raising VAT [value-added tax] from 16.5 percent to 17.5 percent may appear marginal on paper, but its cumulative effect on household budgets is enormous. VAT applies to a wide range of goods and services, including soap, cooking oil, clothing, transport services, school materials and many basic consumables. “In an economy already suffering high inflation, the additional one percentage point increase triggers price hikes across entire supply chains.” In Parliament on Tuesday, Minister of Finance, Economic Planning and Decentralisation Joseph Mwanamvekha said it was not correct to suggest that the revised Paye structure will disproportionately affect low-income earners.
He said those earning less are better off than they were in the previous tax regime. On the increased VAT, he said tightening corporate taxation and restructuring of Paye are meant to contain a widening fiscal deficit projected at K3.1 trillion this fiscal year that ends on March 31 2026.
