Saturday, June 4, 2011

What About Excise Tax in Proposed 2011/12 National Budget?

135. Mr. Speaker, Sir, allow me to now turn to Excise tax measures.
136. Mr Speaker, Sir, as Honourable Members may recall that, in the 2010/11
budget, we increased Excise Duty on alcohol and cigarettes in order to address the
increased inflow of cheap alcohol and cigarettes which not only hurt the local
industry but also encourages alcohol abuse. Mr. Speaker, Sir it is worrisome to
note that the problems still exist and to address this problem further, Government
has introduced a single specific Excise tax on Cigarettes regardless of the type of
packaging. Imported cigarettes will attract a specific Excise duty rate of US$30
per 1000 sticks while cigarettes with more than 70% local content will attract an
Excise tax of US$15 per 1000 sticks. Mr. Speaker, Sir, Excise tax on other
cigarettes and other manufactured tobacco will be increased to 200%.
137. Mr. Speaker, Sir, Excise tax on all alcoholic beverages has been increased
by 10%. In addition, alcohol packed in sachets and plastic bottles will now attract
an Excise duty of 150%. This measure is designed to assist in addressing the 73
problem of alcohol abuse by minors. Honourable Members should be aware of
the extent of this problem in our country. Mr. Speaker, Sir, I wish to appeal to all
Government Ministries and Departments to put in place administrative measures
to control the distribution, sale and consumption of alcohol by minors.
138. Mr. Speaker, Sir, in order to control the use of industrial alcohol for the
production of alcohol, Government will impose strict conditions for the purchase
and use of ethanol produced for industrial, pharmaceutical and scientific purposes.
139. Mr. Speaker, Sir, this Honourable House will appreciate the abundant forest
resources that this country is endowed with. It is important, Mr Speaker Sir, that
we not only avoid depletion of these resources but control and benefit from their
use. It is in this regard Mr. Speaker, Sir, that Government has introduced an
Excise tax of 50% on locally used timber. Exported timber will attract an Export
Duty of 100% of export value. Government has an obligation to protect its
remaining forest reserves. Honourable Members only have to travel to
Chikangawa Forest in Mzimba to see the extent of deforestation taking place at
that Forest reserve. These measures must therefore be seen in that context.
140. Mr. Speaker, Sir, this August House is aware that still mineral water attracts
an excise duty where as flavoured mineral water doesn’t. In order to create
fairness in the taxation of this product, Government has therefore introduced an
excise duty of 20% on flavoured mineral water. 74
141. Mr. Speaker, Sir, Government continues to honour its commitment to
address climate change issues through the reduction of pollution and dumping
caused by the proliferation of old motor vehicles. Government has, therefore,
increased Excise Duty on passenger carrying vehicles which are more than 8 years
old by 10% and those that are less than 8 years old with engine capacity of greater
than 2000 CC by 5%.

142. Mr. Speaker, Sir, in order to protect the Malawi society from dumping,
Government has introduced a 25% Excise duty on rags and Excise duty on used
clothing, furniture and toys has been increased to 25%.
143. Mr. Speaker, Sir, this Government recognises the importance of agriculture
and it intends to vigorously promote Agricultural production and processing. It is
in this regard, Mr Speaker, Sir, that Government has removed Excise tax on sacks
for packing agricultural produce. Mr Speaker, Sir as will be presented later import
duty on the same has been reduced from 25% to 15%.
144. Mr. Speaker, Sir, let me now turn to Customs measures that will be
implemented in the 2011/12 Budget. 75
145. Mr. Speaker, Sir, as this August House is aware, the commendable economic
progress which the country has achieved in the recent years has led to an increase
in non-commercial travelling amongst the public. The threshold for raising a bill
of entry is currently at MK 50, 000. The requirement to raise a bill of entry
implies that the traveller has to engage a customs clearing agent to clear their
goods through customs. Considering the growth in the number of travellers whose
documents have to be processed, there is need to raise the threshold so as to
increase efficiency in the clearance process and give some relief to travellers. In
view of this, Mr. Speaker, Sir, Government has raised the minimum requirement
for raising a bill of entry from MK 50, 000 to MK 100, 000.This will apply to
non-commercial consignments only.
146. Mr. Speaker, Sir, as Honourable Members are aware, Government removed
duty on mobile phones which has tremendously improved access to mobile
telecommunication services by rural communities. Government intends to
compliment this development by removing customs duty on solar cell phone
147. Mr. Speaker, Sir, as presented earlier, Government has reduced import duty
on sacks used to pack agricultural produce from 25% to 15% in order to
encourage farmers to use quality packaging material for their produce.
148. Mr. Speaker, Sir, as stipulated earlier in my presentation, Government will
continue to protect this country from dumping and encourage local production in 76
targeted sectors of the economy. It is in this regard, Mr. Speaker, Sir, that duty on
rags has been increased from 10% to 25%.
149. Mr. Speaker, Sir, in order to encourage local production of flour for bread
and confectionery and to ensure that local producers of the same become
competitive, Government will increase import duty on wheat flour and meslin
flour from 5% to 20%.
150. Mr. Speaker, Sir, transaction costs for the Malawi Revenue Authority when
conducting inspections and processing customs documents have risen over time.
In view of this Government has increased the Destination Inspection Fees and
Processing Fees to MK 25, 000 and MK 5, 000 respectively

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