Parliamentary committees endorse MRA’s tax stamp

* As level smuggling of goods shocks two Parliamentary Committees of Public Accounts and of Industry, Trade & Tourism

* Smuggling is a huge problem and the only solution to prevent it is by bringing different mechanisms like tax stamps

By Tikondane Vega, MANA

Public Accounts Committee of Parliament says it fully supports Malawi Revenue Authority (MRA) idea to fully use tax stamp as a tool to eliminate goods smuggling into the country.

This also follows the observation by the Parliamentary Committee on Industry, Trade & Tourism, which expressed its shocked with the level smuggling of goods — saying there is a need to find lasting solutions on how to deal with malpractice.

On Tuesday, during an inspection of MRA warehouse in Lilongwe and unchartered routes that smugglers use, chairperson Public Accounts Committee, Mark Botomani said the committee has hands-on experience on how people smuggle goods into Malawi — thus endorses MRA to use tax stamps on products as doing so is protecting other business people.

“After our inspection today, we have noticed that smuggling is a huge problem and the only solution to prevent it is by bringing different mechanisms like tax stamps,” he said. “No country can run without taxes and MRA needs our support.

“Likely, the stamping issue has the potential to reduce smuggling and thats the only solution since the government is losing a lot of money through smuggling of goods — thats evading tax.

“However, MRA should continue sensitising the public on the matter,” Botomani said, in direct reference to some sections of the public who seem not to understand the benefits of the tax stamps.

Just last week, activist Bon Kalindo claimed he was 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.

But some members of the public reacted back, saying Kalindo was misleading people and that he 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 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.

On his part after hosting the Parliamentarians, MRAs Commissioner General, John Biziwick emphasised the goal behind tax stamp is to protect and safeguard local industries and consumers from unfair competition posed by illicit, smuggled, and counterfeit excisable products.

He said the idea also seeks to ensure that consumers are not exposed to unbranded and potentially hazardous imports which could be detrimental to health.

“The local industry will be saved from unfair competition of smuggled products because only legitimate products will have the stamp, and only legitimate products will find their way onto the market.

“Because of smuggling, the market share of products that have been produced in Malawi has been impacted negatively. By bringing in tax stamps, local industry will be saved from the competition of smuggled products,” he explained.

The stamp endorsement is coming just a day after another Parliamentary Committee of Industry, Trade & Tourism, led by Paul Nkhoma, did the same inspection on Monday and Nkhoma observed that it is pathetic that while government needs more resources to assist Malawians, some people continue to evade tax through smuggling.

Nkhoma said it was important for the committee to visit places like Salati, which borders Malawi with Mozambique as well as Dickson Trading Centre, a famous place where all smuggled goods are gathered.

“Our aim of coming here is to appreciate the good work that MRA is doing and also to see some challenges like smuggling,” he said. “They took us to smuggling hotspots where we indeed saw people with motorcycles as well as bicycles taking goods to Malawi from Mozambique.

“We are told that at night, more vehicles use these unchartered routes with goods loaded into our country. All these are in the name of evading tax. More sensitisations are needed on the part of the community.”

Nkhoma has since commended MRA for considering the introduction of tax stamps as well as coming up with drones, saying the two will help the institution curb smuggling and increase revenue collection in the process.

Chairperson for the Budget & Finance Committee, Gladys Ganda who also joined the committee, said the revelations that MRA collected MK3 billion from smugglers last year is a clear indication that Malawi is losing more through smuggling.

Ganda said as chairperson of budget committee she will ensure that MRA has all the resources to fight smuggling as well as bringing more resources to run the affairs of the country.

“Countries are run by taxes from different activities,” she said. “If we decide to invade tax like what we have seen today in warehouse and routes we visited then we will not manage to construct classrooms, buy medicine, and construct good roads among others.

Biziwick said MRA has put several measures to curb the smuggling of goods, saying apart from the introduction of drones and stamp tax, the authority is also considering revising the informant scheme as well as interconnecting with the Mozambique side.

“We have already started discussions with our counterparts in Mozambique to help us curb the smuggling business,” he said. “On informants, we plan to reward people with a handsome amount. It is our hope that everything will be done soonest.”—Additional reporting by Duncan Mlanjira, Maravi Express