NEW TAX MEASURES TO HURT CONSUMERS

One of the audit firms in the country, EY has stressed that the newly introduced 16.5 percent Value Added Tax (VAT) on cooking oil which comes into effect on 1 October 2020 will hurt consumers.

The firm said in its tax update for the 2020 national budget that there is need for Treasury to engage oil manufacturers on the introduced VAT and consider making the price of cooking oil VAT inclusive to reflect the intention of the government.

The update reads, : "The manufacturers continue to benefit importation of raw materials duty free through the industrial rebate scheme. There will, therefore, be no expectation of increased oil prices since the oil industry is protected from adverse competition under the surcharge tarrif regime. However, VAT is a consumption tax, and the final consumer bears the final burden".

Minister of Finance, Felix Mlusu announced in the 2020/2021 National Budget Statement that the tax free bracket will be increased subject to enactment of the taxation amendment bill 2020.

The increase will be from K45,000 per month to K100,000 per month and the 15 percent middle tax bracket has already been proposed in the bill to be removed.

According to EY, the eleventh schedule to the taxation act was amended in 2019 and it applies not only to pay as you earn individuals, but to " individuals" business income as well.

The firm said, : "It is hoped that the proposed amendment will clarify on the scope of the intended disparity on allowable deductions  between the corporate entities and individual business income".

EY stresses that the proposed amendment on Capital Gains Tax, if not carefully analysed and pragmatically drafted, may cause confusion to the tax payers.

Income that accrues to a tax payer under section 11 of the taxation act, is income to which the taxpayer has a vested rather than a contingent right.

In a sense that a vested right is a right of ownership, including the right of enjoyment, which may however be postponed, and that a contingent 'right' is a  chance or a possibility of a right.

BCC DEMOLISHES ILLEGAL VENDING SHARKS

The Blantyre City Council (BCC) has demolished business sharks of illegal street vendors in Limbe in order to force them back to their legal business places.

BCC has demolished the sharks the night before of which some people claim that the vendors were increasing crime rates in the town and also that they were destroying the town's streets as others reached an extent of doing businesses on verandah's of other shops.

In the morning, some people tried to start havoc but did not go far as police officers acted quickly.

Currently, there is no immediate response from the BCC to clear the matter.

BUDGET STATEMENT FACES HOT SPITS

Mlusu - Budget has been prepared under the theme 'Living the promise'

The newly presented 2020/2021 national budget tabled in Parliament last Friday has come into a convolution of crushing views as several bodies respond to the budget statement.

The budget which is to come into effect from 1 November 2020 has been proposed at K2.2 trillion.

Speaking when presenting the budget, the minister of finance Felix Mlusu said the budget has been developed under the theme 'Living the  promise' and the focus is achieving sustainable and inclusive growth, macroeconomic stability and sound financial management.

Kapito - 'Budget not good for consumers'

He  said, : "The objectives will be pursued through transparency and accountability, rule of law, enhanced resource mobilisation, efficient resource utilisation and provision of infrastructure".

However on Saturday, the Consumers Association of Malawi (CAMA) issued out a statement which faulted the government that they ignored the promises that could generate resources to support livelihoods.

In the statement, Cama executive director, John Kapito said the budget does not respond to any economic recovery and is a complete departure from the many promises that were made during the campaign period.

" Most Malawians expected that the new government would do things differently from the previous government, but unfortunately the current budget statement is unable to articulate key issues that the government needs to pursue to resuscitate the ailing economy and people's livelihoods ". Kapito hinted.

Some of the ignored promises which Kapito stated include :  the reduced prices of passport and driving licences, free connection of water and electricity, the creation of one million jobs and the removal of taxes on some basic goods and services.

" Government has Instead introduced measures that will hurt many consumers such as the introduction of new taxes on some products such as cooking oil and taxes on winning bets which has become a new income generator to the many unemployed Malawians". He added.

On the other hand, the Malawi Confederation of Chambers of Commerce (MCCCI) also responded to the budget saying it has failed to consider private sector tax incentives.

MCCCI director of business environment and policy advocacy Madalitso Kazembe said they hoped for efficiency driven fiscal policies and reduced tax burden from the government.

"We also expected the minister to articulate measures they will undertake to pay outstanding arrears to private sector going forward as this has been a big challenge for years". Kazembe said.

However, Kazembe said overall, the budget will address fiscal deficit measures and emphasises on reducing overall debt by coming up with a debt reducing fund.

She added, : " The budget has however emphasized the need to integrate the informal sector into the system, which if it were to succeed could be one way of widening the tax base".

Commenting on the same budget, former minister of finance, Honourable Joseph Mwanamveka said the government has lied to the country as a lot of promises that hooked the hope of Malawians have been skipped.

Mwanamveka also added that a lot of policies that have been included in the budget are the same with those of the last government.

Out of all the sectors, the education sector  is the leading in fund allocation amounting to K384 billion, the Agricultural sector has been allocated K354.8 billion, health sector K204.7 billion and transport sector K150.6 billion.

Mlusu said the Affordable Input Program has been allocated K160.2 billion and is expected to benefit 4.2 million farming families.

Constituency development fund which members of parliament receive for development of their constituencies has been increased from 30 to 40 million Kwacha. 

MPINGANJIRA BECOMES EX- FDH GROUP BOSS

A renowned business guru in the country, Thomson Frank Mpinganjira has retired from his position as FDH Financial Holdings Group executive officer, a press release  by the group indicates.

The release which has been dated 7 September, 2020 says the retirement is with effect from 1 September 2020.

According to the statement, Mpinganjira's retirement is due to his fulfillment of his ambitions which started in December 1999.

"Dr Mpinganjira's retirement follows the fulfillment of his ambition and vision in December 1999 when the First Discount House was conceived". Reads part of the statement.

Dr Mpinganjira commenced the process of setting up the First Discount House in December 1999 which opened doors in April 2002 as its Managing director until 2007.

The FDH Bank was then later set up in November 2007 with Mpinganjira as its first managing director for a year.

Recently, Dr Mpinganjira was quoted marvelling at his accomplishments regarding his work done.

He said, : " Following the successful listing of FDH  Bank plc, the flagship subsidiary of FDH Financial Holdings Limited, I consider my work done here and it is time to move on".

Prior to his retirement, Dr Mpinganjira will proceed to manage the Thomson and Barbara Mpinganjira foundation and other family businesses while FDH Financial Holdings Limited will continue its corporate social responsibility works inspired  by him.

FDH Financial Holdings Limited currently has FDH Bank plc, FDH money bureau Limited, First Discount House Limited, FDH house advisory services and MSB properties Limited as its subsidiaries.

PUMA GONE DIGITAL - launches 'epuma'

Launches 'e-puma'

As one way of easing transactions with its customers, Puma Energy Malawi Limited has launched a mobile application called epuma which will allow customers to place fuel orders, get notified via arlets for overdue activities and track real time order status among others.


The application which is to be used in mobile phones, tablets and computers, updates the past way where customers used to make calls or send texts to make orders or check balance in their accounts.


During the launch, Puma Energy Malawi managing director, Davies Lanjesi hailed the innovation as an interface between the company and its customers.


He said, : "The  whole end game is for you the end users who go to Puma sites to make sure that every time you come to our retail sites anywhere in Malawi you should find our products, so we are talking about improved efficiency".


Present during the launch of the application was the Minister of Energy Newton Kambala who said the remarkable development will decrease physical contacts amidst the corona virus pandemic.


" Considering that currently we need to create distances between ourselves because of Covid-19, I feel it adds value to how  business is being done". Said Kambala.


The technology is expected to boost the company's revenue which will grow the company and enhance an expansion drive in the next five years.

CAMA WARNS FOR FUEL PRICE HIKING

The Consumers Association of Malawi (CAMA) has warned Malawians on a prospective rise of fuel prices which could be as a result of fluctuation of prices at international market.

The Association said the impact of the hiking on local prices could be in the medium to long term.

Kapito - MERA board need to be appointed soon

CAMA executive director, John Kapito said when updating journalists on petroleum pricing trends amidst Covid-19 pandemic that the demand for petroleum products is now increasing globally as countries are loosening their restrictions.

He said, : "We have noted that on the international market the price of oil has been increasing as economies begin to open up after Covid-19 lockdowns. Again we have noted that the Kwacha has been falling, definitely they would have to increase fuel prices anytime".

He then appealed to President Lazarus Chakwera to be quick in appointing a board for the Malawi Energy Regulatory Authority (MERA) stressing that the only reason prices are not moving up now may be because MERA does not have a board.

MERA board was dissolved in June this year and during the first half of the year, fuel prices have been revised downwards to K664.80 per litre of diesel, K690.50 per litre of petrol and K441 per litre of paraffin.

For a long time, fuel prices have been cushioned by the price stabilisation fund which Kapito said is the reason most recent trend in global prices have not been reflected on the local market.

" Any fuel  price hike would hurt customers but when it is gradual, the pain is less. Again, we don't want  a repeat of a situation which we had in 2012 where we were all sleeping at filling stations because one person, a politician, had made a decision to sell the fuel at less than the price of importation ". Kapito said.

Since March, when the global oil industry faced the biggest drop in demand, prices have developed from below 20 dollars which is about K15,000 a barrel.

Recently, Reuters reported that oil prices edged higher as better than expected and rose 45 cents to 45.58 dollars which is about K33,750 a barrel.