CAMA against one percent tax on mobile money transactions


… says tax is a burden on poor Malawians

Consumers Association of Malawi (CAMA) says government’s decision to introduce one percent withholding tax on mobile money will add more misery on poor Malawians.

In the 2019/2020 Budget Statement under section 146, Government through the Minister of Finance Joseph Mwanamvekha introduced one percent final Withholding Tax on non-bank mobile money transactions based on the transaction amount.

Kapito: it is a burden

According to Mwanamvekha, the decision is aimed at ensuring that a large number of the citizenry are motivated to contribute toward national building through payment of taxes and ensure that Government has scope to improve service delivery.

However, CAMA through its Executive Director John Kapito says it will lobby parliament to stop the move because it’s aimed at punishing poor Malawians who are the biggest users of mobile money.

Kapito was speaking during a press briefing at CAMA offices in Limbe, where among other things, he said his association has already engaged Public Account Committee, Finance and Budget Committee and the Media Committee to try to stop Government from going ahead with the decision.

In his argument, Kapito said he was very surprised that Government decided to introduce the tax without even consulting CAMA.

“The new tax is against financial inclusion initiatives and, worse still, it is clearly segregative against the poor. It is also against fairness and neutrality, some of the pinnacles of taxation. This is so because the tax is only applicable to non-bank led transactions.

“Mobile money has greatly contributed to Malawian’s access to financial services with over 7 million subscribers transacting through Mobile Money wallets in Malawi, as well as job creation with over 40, 000 agents facilitating Mobile Money operations and this development will not only hinder Malawians but the operators as well because most consumers are likely to stop using mobile money because of the transaction costs,” he explained.

Asked on what his association will do if Government through the Parliament  still implements the withholding tax, Kapito said: “The government will meet with greater resistance because we will not just sit down and watch them stealing from us. Whilst broadening of the tax base is desirable, there are other areas that can be considered such as taxes on transaction fees and taxes on interest earned on mobile money trust accounts.”

“Mobile money tax is disproportionately harsh to the low income consumers and against the equality as provided for in section 20 of Malawi’s constitution,” he said.