Govt urged to scrap off VAT on cooking oil

By Chancy Namadzunda:

Centre for Democracy and Economic Development Initiatives (CDEDI) Executive Director Sylvester Namiwa has called on government to scrap off 16.5 percent Value Added Tax (VAT) on refined cooking oil in the 2020/21 National Budget.

During budget presentation in Parliament last year, Minister of Finance, Felix Mlusu, said the VAT on refined cooking oil is a move to ensure efficiency in the VAT system.

However, In an interview with The Atlas Malawi, Namiwa said move has a negative impact on the poor people.

“The VAT on cocking oil is showing its ugly face on the poor people since the shelf price for cooking oil has gone up. CDEDI is therefore challenging the Tonse Alliance administration to scrap off the 16. 5 percent VAT.

“Let me also add that besides this VAT triggering the infux of smuggle oils the development will affect prices for soya beans. Over the past years the prices were steadily increasing due to increasing demand by local producers now the vat means many people won’t aford the locally produced oil s therefore no demand for raw materials ie soya,” he said.

A recent snap survey by The Daily Times has established that on average, prices of cooking oil went up in September by 52 percent.

Tax expert, Emmanuel Kaluluma, told the paper that the fears for increased prices of cooking oil are legit but the move to reduce the cost of production through the regime is welcome.

“What we have to accept is that VAT is a consumer tax. The argument from the government side is that to produce a litter of cooking oil there are components such as packaging material which they were paying VAT on but because they were not claiming input tax they were passing that cost to the consumer.

“Now what will happen is the VAT that they will pay to produce a litter of cooking oil, they will claim it and it will reduce their VAT tax thereby reducing the cost of production and should also reflect on the price of the product” Kaluluma said.

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