President Prof Arthur Peter Mutharika has instructed the Malawi Revenue Authority (MRA) to remove withholding tax from tobacco for smallholder tobacco growers.
The removal of the tax involves tobacco farmers who sell ten bales of tobacco and below.
Mutharika made the announcement in Lilongwe on Thursday during the official opening of the 2019 Tobacco Marketing Season at the Lilongwe Auction Floors.
United Republic of Tanzania President, Dr John Magufuli who was in the country on a two day State Visit officially opened this year’s Tobacco Marketing Season.
Mutharika said he has reached the decision for the targeted removal of withholding tax on tobacco because farmers play an important role in the economy of the country and as such their efforts have to be appreciated in one way or the other.
He said tobacco is a strategic crop for Malawi and as such his government is committed to work towards enhancing the crop by giving smallholder farmers incentives that would boost their trade.
“These are the farmers who sell their tobacco in clubs but I want each smallholder farmer to benefit. I want to see our farmers getting home with more. I also want to see farmers getting prices for their produce,” he said.
The president said his government is committed to promoting the tobacco industry by reforming it citing the targeted removal of withholding tax as one of such reforms.
Last year President Mutharika committed to finalizing the Tobacco Industry Bill and make it into law and today the country has the Tobacco Industry Act.
Mutharika observed that the law will protect farmers as well as investors.
He, therefore, appealed to the Tobacco Control Commission to implement the Act with speed.
The Malawi leader took time to appeal to buyers to keep the set minimum prices at the floors and not otherwise.
“Above all, let us protect our farmers. I don’t want to hear that growers are being overcharged by service providers. That is no longer acceptable.
“We agree on minimum prices, it works at the first week of opening but weeks later prices go down, that is unfair and unacceptable. Let us give our farmers their price,” said Mutharika.
President Magufuli hailed Mutharika for removing withholding tax on smallholder tobacco growers saying it would go a long way in promoting the tobacco industry in the country.
He appealed to buyers to abide by the set minimum prices as proposed by government.
“I have been informed that there is a price set for buying tobacco but I would like to appeal to the buyers not to only look at that price but propose better prices so that farmers can be motivated to produce more and raise their income and livelihoods,” said Magufuli.
Tobacco is the main forex earner for Malawi and during the 2018 season the green gold fetched US$336 million (approximately K244 billion).
By Patricia Kapulula from MANA