Africa-Press – Malawi. Malawians are sinking deeper into an unprecedented cost-of-living crisis as newly revised taxes collide with stagnant wages, leaving millions trapped between shrinking incomes and runaway prices of basic necessities.
The latest tax adjustments have reignited urgent calls for a minimum wage review, with economic justice advocates warning that workers are now being taxed into deeper poverty instead of being rescued from it.
Centre for Social Concern (CfSC) economic governance officer Agness Nyirongo said failure to urgently review the minimum wage is now stripping Malawians of dignity and survival.
“The cost of living is now close to K1 million per month, yet the minimum wage is just K126 000 for formal workers and K72 800 for domestic workers. That gap alone exposes the depth of economic hardship Malawians are facing,” she said.
CfSC estimates that an average household now requires K945 029 per month just to survive—an amount nearly eight times higher than what many workers earn. For the vast majority of households surviving on informal work, piece jobs or subsistence farming, this figure is not just unrealistic—it is completely unattainable.
Yet instead of easing the burden, government has tightened it.
Under the newly passed Taxation (Amendment) Bill, the zero Pay As You Earn (Paye) bracket has only marginally increased from K150 000 to K170 000, while workers earning between K170 000 and K1.57 million will now be taxed at 30 percent, up from 25 percent.
Those earning up to K10 million will now pay 35 percent, while those earning above that threshold will be hit with a punitive 40 percent tax.
At the same time, Value Added Tax (VAT) has jumped from 16.5 percent to 17.5 percent, while the Malawi Revenue Authority will now collect tax on residential rental income—a move widely expected to trigger automatic rent hikes passed directly to struggling tenants.
These measures come at a time when food prices, fuel, transport, rent, school fees and medical costs are already beyond the reach of ordinary families.
Despite this grim reality, Minister of Finance Joseph Mwanamveka told Parliament that the tax changes were designed to “cushion” low-income earners—an explanation that has left many Malawians stunned.
While the Minister insists the revised Paye structure protects the poor, economists and civil society actors say the lived reality tells a completely different story: wages are collapsing in value, prices are exploding and taxes are rising simultaneously.
Nyirongo said without bold countermeasures, the new tax regime will brutalise the poor further.
She urged government to expand VAT exemptions to cover essential goods such as maize flour, sanitary pads, school materials and basic medicines, warning that VAT is inherently regressive and punishes the poor more than the rich.
She also warned that taxing residential rentals without strict enforcement will allow landlords to freely shift the burden onto tenants.
“Without strong consumer protection, tenants will be exploited without mercy,” she said.
Asked about a minimum wage review, Ministry of Labour acting deputy commissioner Lenius Daiton initially asked for a questionnaire—highlighting the slow bureaucratic response to an urgent national crisis.
On the private sector side, Employers Consultative Association of Malawi (Ecam) executive director George Khaki admitted that businesses are also under intense pressure from the new tax regime.
“The private sector will be affected through reduced profitability, but we still desire to pay meaningful wages. However, there cannot be a one-size-fits-all solution because employers’ abilities differ,” he said.
Khaki also warned that only a fraction of Malawians are formally employed, meaning the majority—who are already extremely vulnerable—will suffer the most from the tax measures.
“It is the responsibility of those in authority to ensure the vulnerable are protected,” he said.
But Treasury remains defiant.
In an earlier interview, Mwanamveka defended the tax hikes, arguing they were carefully introduced under the 2025/26 Mid-Year Budget Review and were meant to ensure that those with greater financial capacity contribute more to rebuilding the economy.
However, analysts warn that the strategy may backfire.
According to the Economics Association of Malawi, while the tax and non-tax reforms may boost revenue on paper, they risk triggering dangerous inflationary pressures that could further erode household purchasing power.
The association warned that raising Paye could even reduce total revenue, noting that collections only reached 96 percent of the 2024/25 target due to the expanded zero-Paye bracket.
It further warned that the VAT increase, although expected to raise revenue by six percent, will likely be passed directly to consumers, fuelling higher prices and crushing demand.
As government tightens its grip on wages, rents, consumption and earnings, Malawians now face a brutal reality:
they are being taxed harder in the middle of the worst cost-of-living crisis in recent history—without a matching rise in income.
With households requiring nearly K1 million a month to survive, yet earning barely a fraction of that, the question now haunting millions of families is no longer whether life is getting harder—but how long Malawians can survive before the economic pressure finally breaks them.
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