An analysis of the tax incidence of VAT to milk in Malawi

C Revoredo-Giha*, L Toma, F Akaichi

*Corresponding author for this work

Research output: Contribution to conferencePaperpeer-review

Abstract

Dairy is a key investment sector for the Government of Malawi. On the 1st of October 2016 the Malawi Revenue Authority announced that milk, which until then had been exempted of the valued added tax (VAT), was going to be taxed at the standard rate of 16.5 per cent. Although the tax was scrapped in May 2017, the purpose of this paper is to study the incidence of such a tax along the domestic dairy supply chain as it provides unique information about the functioning of the Malawian dairy chain. For the analysis, a spatial multimarket model of the Malawian dairy supply chain was used. The results indicate that 24.3 per cent of the revenues of the introduced VAT would be borne by consumers and the remaining 75.7 per cent by the domestic dairy industry. This is mainly due to the fact that consumers’ demand for pasteurised milk is price elastic. The results highlight the sensitivity of inclusive value chains to changes in consumers’ demand.
Original languageEnglish
Number of pages16
DOIs
Publication statusPrint publication - 23 Sep 2019
Event6th African Conference of Agricultural Economists - Abuja, Nigeria
Duration: 23 Sep 201926 Sep 2019

Conference

Conference6th African Conference of Agricultural Economists
Country/TerritoryNigeria
CityAbuja
Period23/09/1926/09/19

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