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| Opinion |
| Editorial |
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by
Editor, 10 May 2007
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08:26:45
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Cold Storage taxes could have been handled better
That government let go Cold Storage Company Limited into private hands in July 2004 or thereabouts while it still owed the Malawi Revenue Authority (MRA) about K10 million is hard to believe. It is even more confusing to learn that Treasury has not made any effort since then to recover the money.
It sounds very strange for an economy which often has a very narrow taxpayer base—where very few people bear the burden of contributing to the Treasury.
Through the privatisation process, a management buy-out team purchased the Lilongwe plant of Cold Storage now operating as Lilongwe Cold Storage for K12 million while the Blantyre operations were bought by S&A; Beefmasters of Ngabu in Chikwawa for K25 million.
Money was raised from the two transactions. No question about that.
Rightly so, some members of the Public Accounts Committee (Pac) of Parliament this week questioned the reasoning behind Treasury’s plans to write-off the tax money. Treasury Secretary Radson Mwadiwa said government has not taken any action to recover the money because Cold Storage, as a government company, was closed.
It is such cases and several others which have given the privatisation process a bad image. The public has always wondered who is the winner and indeed whose interests are served by the exercise, especially where issues such as outstanding taxes are not sorted out at the time of sale.
Taxes are used to finance social services, among other things. When government deliberately fails to collect taxes like in the Cold Storage case, what it means is that government resorted to heavily taxing the few compliant taxpayers.
Surely, Treasury could have handled the issue better than this.
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