Bon Kalindo seems not to understand benefits of newly-introduced excise tax stamps

Kalindo addressing the media in Lilongwe

* As he announces nationwide demonstrations on August 8 over new tax measures, voter registration and national IDs

* Tax stamps are protecting local and legitimate industries from unfair competition from businesses engaged in illicit, smuggled and counterfeit excisable products

* It is also to control consumption of unbranded and counterfeits where source of products cannot be verified and authenticated

* While at the same time to promote voluntary tax compliance among manufacturers, importers and distributors

By Duncan Mlanjira

Activist Bon Kalindo claims he is in the process of mobilising Malawians to hold nationwide demonstrations on August 8 calling for government to redress some economic and political governance issues — including demanding for the suspension of the newly-introduced excise tax stamps.

Other demands he announced at a press conference in Lilongwe — through his pressure group called ‘Malawi First, the People First’ — included that the National Registration Bureau was asked to reform the identity card processes in order for more Malawians to acquire them.

He claimed that the government has not responded to their concerns — hence the declaration to hold the demonstrations that he is organising the nationwide demonstrations also in protest against voter registration and national identification registration.

But it seems Kalindo does not to understand the benefits of tax stamps, an initiative that the line Ministries, Finance and Trade, initiated to protect local and legitimate industries from unfair competition from businesses engaged in illicit, smuggled and counterfeit excisable products.

It is also to control consumption of unbranded and counterfeits where source of products cannot be verified and authenticated while at the same time to promote voluntary tax compliance among manufacturers, importers and distributors.

It is also aimed at optimising tax collection for the improved delivery of social services and the targeted products include bottled water (pure & flavored); carbonated soft drinks; drinks made from cereals like maize, sorghum, millet (maheu); energy drinks.

It also includes malt beer; wines; opaque beer; spirits (whiskies, gins, rum); fermented beverages; lotion & glycerine and cigarettes. The tax stamps was already rolled out on cigarettes to counter rampant smuggling of the product from neighbouring, which share same manufacturing brands.

The stamps are in the form of secure paper stamp affixed on a product as a sticker or label through manual or automation and secure digital stamp — printed directly on product packaging using special ink.

This was unveiled by Malawi Revenue Authority (MRA) last week during its annual engagement meeting with the media, and in his presentation, Deputy Commissioner-Donestic Tax, Kondwani Sauti Phiri highlighted that the initiative followed some concerns made by legitimate manufacturers and importers over illicit, smuggled and counterfeit products that are supposed to be excisable.

He added that while there was some resistance from manufacturers and importers over high cost of stamps; machinery modification & equipment cost; affixation complications for bulk packaging and potential influx of fake tax stamps, the tax measure — dubbed Kalondola has been positively embraced.

Sauti Phiri also highlighted that through the Kalondola tax system, MRA is able to keep track of how many products have been manufactured by big companies since the digital stamp printing directly on product packaging also counts.

At the same time, the system is also to protect consumers health from illicit products while increasing the tax base such a way that an increased tax compliance society leads to reduction of tax on the “thin cow that is being milked” — thus the government able to offer better services to its people.

In his opening remarks, Commissioner General, John Biziwick, emphasised that MRA is just taxed by the government through its line Ministries to comply to heightening of tax compliance.

He stressed that MRA made a commitment that on an annual basis, they should engage with the media where they could articulate issues regarding their operations and changes in tax laws that everyone in the country must adhere to.

“MRA is committed to ensure that all tax knowledge and skills are shared with members of the press to advance capacity and ensure effective utilisation across the news gathering chain,” he said. “Being the Fourth Estate, you have a great power and as they say, ‘With Great Power Comes Great Responsibility’.”

He thus said the annual engagements are to enhance MRA’s Core Values of fairness, integrity, service, excellence and transparency and expects the media “to play a crucial role in facilitating vast positive economic growth”.

He further ground it to the ground as a tax administrator, MRA is calling on every citizen, including the media, to duty, saying: “All of us here are citizens first and patriotism has to be prime in our respective daily activities, even in the media practice, such that paying of tax must always be regarded as a duty to Malawi not a right.

“This is why MRA takes the media as a key partner to support voluntary tax compliance in the country. We are, therefore, very grateful that over the years, the media in the country have been undertaking patriotic roles that continue to support revenue collection.

“This is evidenced through swift dissemination of information to members of the general public about taxation and MRA’s operations countrywide. Such efforts have enabled more Malawians to voluntarily come forward to pay tax and financing the national budget.

“By promptly paying taxes, Malawians are progressively realising that domestic resource mobilisation for Government’s operations is possible.”

He took cognizance that taxation is a technical field and modalities of practice are dynamic — hence the gathering is to see to it that the media is well informed to productively articulate tax issues.

“MRA is very committed to provide the public with facts through the media and I urge you to always be in constant touch with the Corporate Affairs Division. We will continue to provide you with feedback on developments taking place at MRA.

“Since this is a working relationship, we are optimistic that you will continue to timely offer the public with factual tax information.”

He then unpacked interrelated areas of the meeting that on March 31, MRA closed the fiscal year 2023/24 posting a high revenue performance with a total collection of K2.19 trillion.

“This is an unprecedented record for MRA and it also represented a 42% growth over 2022/23 fiscal year collection of K1.54 trillion. We have started the new 2024/2025 financial year on a promising note with a first quarter collection totaling K656.48 billion as of 30th June 2024.

“The collection falls short the quarterly target of K748.11 billion by K91.62 billion. However, this collection represents a growth of 41% when compared to the collection for the first quarter of 2023/24 financial year.

“Looking ahead to the remaining nine months of the 2024/25 financial year, which ends on March 31, 2025, MRA has set an ambitious target of collecting a total of K3.26 trillion.

“Achieving this goal will require the continued voluntary compliance of all taxpayers, contributing their fair share of taxes,” he said, while reiterating that the media plays a pivotal role in this endeavour.

“By raising awareness, disseminating crucial information, and fostering a culture of tax compliance, you, the media, are key partners in our drive to reach this target. Your support in educating the public about the importance of tax compliance, the benefits of a robust revenue system, and the ways in which tax contributions support national development, is invaluable.

“Despite facing challenges in meeting all targets for the first quarter of the financial year, the MRA remains steadfast in its commitment to optimizing revenue collection.

“We are implementing strategic measures to address these challenges and enhance our efficiency. With your partnership, we are confident that we can overcome these hurdles and achieve our collection goals.

“By working together, we can ensure that the MRA meets its objectives, thereby supporting the government’s ability to provide essential services and infrastructure for the benefit of all Malawians.”

As a reminder, Biziwick highlighted that MRA operates under the:

Vision-To be a modern revenue administration known for service excellence; and the

Mission-To collect revenue and facilitate legitimate trade for national development; and

MRA also has a robust programme called MRA4Change “which is there to ensure that taxpayers get standardised high quality service on time and every MRA employee has been groomed on how best to achieve this aim”.

Thus Kalindo is misinforming the public on the excise tax stamp system, which the targeted corporate citizens and importers have started reaping its fruits to mitigate against manufacturing and importation of illicit, smuggled and counterfeit products that are supposed to be excisable.