The government of Malawi has backtracked on a proposal to levy a 1% tax on mobile money transactions.
This is after public outcry from the citizens after the proposal was announced.
In its stead, the Malawi government will introduce a 20% withholding tax on interest earned by trust funds created by mobile money companies.
Malawi’s Minister of Finance, Economic Planning, and Development, Joseph Mwanamvekha, suggested that the tax would bank roll social programs.
He added that the tax would also improve government service delivery.
He also suggested that it would, ”motivate people to contribute towards national building.”
Mobile money companies voiced their disapproval for the tax, and said it would deter financial inclusion.
John Kapito, Executive Director of the Consumer Association of Malawi is of the opinion that the tax is a war against the poor.
He said, “This is an insult that has come in this budget, which as consumers, we feel it is targeted at punishing the most vulnerable groups who are mostly in rural areas doing small businesses.”
Telkom Malawii’s CEO notes that the 1% tax would inflate mobile money costs by 25%.
Other members of the public assert that the tax would impede governments’ efforts to empower rural people.
In a statement to local media, Sunduzwayo Madise , a law lecturer at the University of Malawi’s Chancellor College said, “on one hand, mobile money service was touted by the government as a solution to empower rural people but on the other hand, the system has now decided to plot against the very people it should empower and will take from them the little that they have and fill up the tax purse.”
Mobile money usage in Malawi went up 8.2% to 7 million transactions in 2019.
