Government Removes Tax on Bread, Increases Duty on Alcohol In ...

Written By: Limbikani Mhura on June 8, 2012.

Government has removed the Value Added Tax (VAT) on bread and has?increased exercise duty on sachet and plastic bottled beer, Finance?Minister Ken Lipenga announced on Friday.

In his Budget Statement in Parliament Lipenga said government has?reviewed some policy measures that were adopted during the 2011-2013?budget which was deemed Zero Deficit.

One of the commodities that government introduces VAT on was standard?bread which consequently increased the bread prices on the market.

?Mr Speaker Sir, the cost of bread has substantially increased?partially because of the taxes that were introduced on standard bread?in the 2012 budget.

?I wish to announce that government has now removed VAT on bread. In?view of this, may I ask the honourable members to join me in imploring?the industry to reduce the prices of bread in response to these policy?measures,? said Lipenga.

Lipenga also announced the removal of tax and duties on some?commodities. The minister announced that government has removed duty?on second hand clothes and textiles and VAT on newspapers and internet?services.

Lipenga said in order to attract investment, VAT on machinery has also?been removed together with VAT on financial services.

The Minister of finance said government has noted that alcohol abuse?by minors continues to increase at an alarming rate in the country?despite government introducing 100 percent excise duty on sachet and?plastic bottled beer.

Lipenga therefore, announced that ?it is in this regard that?government has decided to increase exercise rate to 250 on alcohol.?

The Finance Minister also announced that Government has increased?corporate tax paid buy phone operators from 30 to 33 percent.

He said returning resident from outside Malawi will be able to clear?duty free motor vehicles they have used for more than 12 months out?side the country.

?We have noted that this provision has been abused in the past, and in?order to reduce the malpractice associated with this provision,?government has decided that duty be paid on disposal of such motor?vehicles and that the provision will only be enjoyed by a qualifying?beneficiary once in every five years. This Lipenga said does not cover?buses, minibuses and other commercial vehicles.

Customs and tax measures will be effective from midnight of 7th June?while the VAT measures will become effective on 1st July 20 12.

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