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Wednesday, June 15, 2011

Presidency, Ministers, MPs to spend K3 billion in salaries and allowances

Everybody but us is a well known nature of any politician, especially those graced with power.
The same can be said about the June 3 Budget presented by the Honourable Minister of Finance Ken Kandodo, it is everything for the poor but for the rich ones, it remains the same.
There were no austerity measures announced for the President, Vice President, his cabinet and Members of Parliament whose combined total of allocation for salaries and allowances is close to K2 billion in salaries and allowances are not facing any cuts in their allocations.
Malawi is one country where inequality in terms of income and real livelihoods are wide apart between the rich and the poor. In essence the budget will tax the poor more, cripple businesses who will lay off many employees creating greater unemployment in an already crowded unemployed market and widen the gap between the rich and the poor.
The lowest paid Civil Servant is grade R whose salary is pegged at K8,000 a month while the majority of Civil Servants including Teachers and Policemen their entry grade is M pocketing at least K15,000 a month.
The highest in public service is the President whose emoluments will cost the tax payer K43, 310,400 according to budget item number 1 under vote 010, on in simpler terms translating into K3.6 million per month. The Vice President earns a two thirds of the President’s salary. The amount is total for two.
It could not be confirmed if the Presidents and Vice President salaries entitlements are tax free or not.
While the seven percent is expected to be added to all Civil Servants, for someone earning K8, 000- a gardener at Capital Hill, his real raise will be less than K700 which is far too little to the calculated increase in goods and services across the country.
Value Added Tax on spare parts, water, bread, salt and meat and withholding taxes on house rentals will push the prices between 10 to 20 percent, adding an extra cost of K5, 000 to low income earners whose requirements for a family of six are put at K50, 000 monthly by Centre for Social Concern.
“I don’t know what will be the legacy of the Finance Minister after he is gone. But when you start taxing water, bread, salt and meat you start asking questions if we are getting our priorities right,” observes Louis Chimango, long time Finance Minister under the MCP regime.
From the Presidency, Office of the President and Cabinet through to Parliament where we elect our representatives to speak for us, nobody is giving up anything for the poor man, they are all happy and contented.
The President will spend K43.3 million, the State Residence with staffing and services of about 200 people will spend K1.5 billion whose K300 million is capital budget for maintenance of several State Houses including bitumisation of Chikoko Bay road.
This is one of the highest expenditures, where money from salt taxes will be spent by less than a percent of the population. There is also K1 billion also earmarked for unforeseen expenditures in this years budget.
Austerity measures Chief Secretary Bright Msaka announced to Civil Servants on March 25, 2011 should also apply to the President, the Cabinet and the National Assembly whose combined allocations total around K20 billion or 7 percent of the budget.
The Cabinet Services will spend K892, 592,053 for about 41 privileged Malawians called Cabinet Ministers meaning the new meat and meat offal’s, salt, bread and water taxes to be collected from every Malawian will finance at least K21.7 million per annum per person of these privileged few.
At K21.7 million per annum, this is 1451 times a Policeman or a Teacher will earn or it will take 120 years for them to accumulate such an income which includes 500 litres monthly fuel, a 4X4 and Mercedes Benz maintenance.
The Honourable Minister of Finance perhaps also forgot to cut the duty free status of the President and the Cabinet including specified numbers of vehicles as their sign of commitment and contribution to zero deficit budget.
The same hand of austerity was forgotten on the National Assembly, where 193 privileged Malawians sit and are allowed to bring in two motor vehicles duty free in five years, meaning in five years should they have paid a nominal duty of K150, 000, public coffers could have swelled by K60 million or K12 million annually enough to buy basic drugs for Kamuzu Central Hospital for a month.
K696, 558,942 has been allocated for MP’s allowances in the 2011/12 budget or each of the 193 peoples representative will have the pleasure of earning an extra K3609113 per annum, while at five days maximum limit allowance for Civil Servants on Grade K for the whole year will see the public earn extra annual income of K480, 000 should they maximize their 60 days approved travel annually.
An additional K604, 525,609 is classified as subsistence allowances for the Honourable Members of Parliament. It was difficult to trace the actual salaries as two figures of around K270 million and K417 million appear as Legislative Affairs and General Administration salaries respectively.
In essence, the gap between the MP in terms of allowances and entry grade in public service annually is around K3.2 million whilst the ordinary Civil Servant will have to pay for increased minibus fares (spare parts going up), rentals (withholding tax) domestic (meat, offals, water, salt) and with the likely hood of companies downsizing as new taxes adding to low production due to poor electricity and water supply, lack of fuel and shortages of foreign exchange will slow down the economy.
The situation should be worse off to tobacco farmers who are now earning around K4, 000 for a bale of 100 kilogrammes, many of whom borrowed from Banks to finance their production, while maize farmers continue to see prices plummet to record low of K15 per kilogramme.
But as poor as they are, the majority whom (an estimated 5 million of the population) live on K300 per day have to continue contributing to the “new found economic freedom” while The President, Ministers and Members of Parliament drive in brand new 4X4 worth K20 million on the market, earn tax breaks for personal vehicles, earn K4 million in allowances annually and more importantly continue to preach prudence to the poor people.
This years budget is the case of the poor paying for the rich lifestyles.

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