Malawi Congress of Trade Union (MCTU) has described the proposed increase of tax free income band for salaried persons as too little.
In the proposed 2018/2019 national budget government has revised the tax free income bracket under Pay-As-You-Earn (PAYE) from the current MK30, 000 to MK35, 000 per month.
The Ministry of Finance, Economic Planning and Development argues that the increase has been made in order to improve the disposable income of taxable salaried persons.
MCTU President Luther Mambala told YFM that the increase has not changed anything in as far as improving the welfare of employees in the country is concerned.
Mambala said the increase is in sharp contrast to their recommendation that the tax band should be increased from K30, 000 to K50, 000.
“We asked the Malawi government through the Ministry of Finance to increase the PAYE tax band, nontaxable from K30, 000 to K50, 000 but you can see that what is in the budget is the opposite,” he said.
Mambala said a lot of factors were considered when making the recommendation to government.
“We were looking at consequences like after the PAYE, you use the scale salary for buying commodities on the market where you are also subjected to Value Added Tax (VAT),” he added.
Mambala argued that the nontaxable PAYE band of K50, 000 would give a breathing space to low salaried employees.