Saturday, October 23, 2010

Malawi: Better taxation for better education

Tiny, land-locked Malawi is amongst the most impoverished in Africa. The people of Malawi live predominantly in rural areas and agriculture is the principal industry. Education levels are below those of regional neighbours, but free primary education has been provided since 1994 and the constitution requires that each child has a minimum of five years primary education.

The available evidence suggests that this policy is working: attendance rates have improved significantly and youth literacy rates are now well over 80 percent. This augurs well for the future, but investment in education costs money, and as this article in Nyasa Times makes clear, aid dependence in an era of austerity is unlikely to provide a sustainable funding source. Greater emphasis is therefore required on collecting taxes and adopting the right mix of tax policies:

One therefore feels there is no choice but to find solutions at home. Taxation may not be the only local solution to the country’s financial challenges; you can also rely on mining, agricultural productivity, tourism, and trade. But taxation is arguably the most predictable and sustainable solution. I can imagine that if Malawi improves tax collection by at least 30%, government will be able to address the NESP funding gap of K20 billion a year and guarantee all citizens better quality education.

Achieving a 30 percent increase in revenue collection might not happen overnight, and attention should be given to ensuring that the tax base is progressive in its overall impact, but the goal is worthwhile, and might even bring pressure to bear on the government to concentrate on meeting the needs of the people, rather than buying toys for the boys in the form of a private jet for the president.

We are, of course, delighted to see reference in the article to Tax Justice Network and our colleagues at Action Aid. Our agenda is widening and deepening.


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