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Malawi doing very good on tax reforms

The 2018 Oxfam and Development Finance International Commitment to Reducing Inequality (CRI) Index has ranked Malawi among the best 10 countries in the world in designing progressive tax systems aimed at reducing inequalities.

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The report shows that Australia, Denmark and South Africa occupy the first three positions in that order, with Malawi on position seven while near the bottom of the tax index are Bahrain and Vanuatu, which have no corporate or personal income tax.

The report is developed to monitor the extent to which governments are tackling the gap between the rich and poor through three policy areas, namely public spending, taxes and labour market.

On the overall, Malawi sits on position 87 on the CRI Index, but occupies position 108 on social spending in relation to health, education and social protection and 121 on labour rights and wages.

On progressive tax systems, the index looks at progress on the three main sources of tax in most countries based on personal income tax, corporate income tax and value added tax (VAT).

Overall, in terms of tax, the data reveals that most of the countries that are performing well are high-income countries under the Organisation for Economic Cooperation and Development (OECD).

Reads the report in part: “This largely reflects the more progressive impact of their tax systems on reducing inequality, they collect a higher share of tax revenue from progressive income taxes, reflecting their larger tax base of individuals and corporations with sufficient income to fall into the tax net.”

It says in general, the countries also perform well in collecting tax, though with notable exceptions such as the USA.

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