Tax Reforms Needed to Boost Revenue, Economy in Malawi
The country recorded a tax-to-GDP ratio of just 10.8% in 2021, well below the African average of 15.6%.
LILONGWE, Malawi — Malawi requires significant tax reforms to increase government revenue, stabilize the economy and reduce poverty, according to economic analyst, writes Winston Mwale.
In his presentation Monday, Donasius Pathera, who specialises in taxation, outlined recommendations to overhaul the country's tax system and administration.
"We need to conduct a comprehensive review of the existing tax system to identify inefficiencies, gaps and areas for improvement," said Pathera.
"Consider reforms that promote fairness, simplicity and efficiency in tax administration."
Malawi has struggled with rising inflation, high public debt and an informal sector that pays little taxes, Pathera noted.
The country recorded a tax-to-GDP ratio of just 10.8% in 2021, well below the African average of 15.6%.
"Many small businesses are not registered for tax purposes," Pathera said. "The untaxed informal sector affects domestic resource mobilization."
MEJN urged the government to take several steps, including introducing progressive income taxes, expanding the tax base, improving property tax collection and implementing wealth taxes.
The group also recommended public awareness campaigns.
"Increase public awareness about the importance of paying taxes and the benefits derived from government revenue," the presentation stated.
The International Monetary Fund has highlighted similar tax policy priorities for Malawi to increase domestic resource mobilization.
The country is working to finalize an Extended Credit Facility with the Fund to address its economic woes.