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Health spending, illicit financial flows and tax incentives in Malawi
Abstract
This analysis examines the gaps in health care financing in Malawi and
how foregone taxes could fill these gaps. It begins with an assessment of
the disease burden and government health expenditure. Then it analyses
the tax revenues foregone by the government of Malawi by two main
routes
• Illicit financial flows (IFF) from the country
• Tax incentives.
We find that there are significant financing gaps in the health sector; for
example, government expenditure is United States Dollars (USD) 177
million for 2013/2014 while projected donor contribution in 2013/2014
is USD 207 million and the total cost for the minimal health package is
USD 535 million. Thus the funding gap between the government budget
for health and the required spending to provide the minimal package
for 2013/2014 is USD 358 million. On the other hand we estimate that
almost USD 400million is lost through IFF and corporate utilization of
tax incentives each year. The revenues foregone plus the current government health spending would be sufficient to cover the minimal public health package for all Malawians and would help tackle Malawi’s disease burden. Every effort must be made, including improving transparency and revising laws, to curtail IFF and moderate tax incentives.
how foregone taxes could fill these gaps. It begins with an assessment of
the disease burden and government health expenditure. Then it analyses
the tax revenues foregone by the government of Malawi by two main
routes
• Illicit financial flows (IFF) from the country
• Tax incentives.
We find that there are significant financing gaps in the health sector; for
example, government expenditure is United States Dollars (USD) 177
million for 2013/2014 while projected donor contribution in 2013/2014
is USD 207 million and the total cost for the minimal health package is
USD 535 million. Thus the funding gap between the government budget
for health and the required spending to provide the minimal package
for 2013/2014 is USD 358 million. On the other hand we estimate that
almost USD 400million is lost through IFF and corporate utilization of
tax incentives each year. The revenues foregone plus the current government health spending would be sufficient to cover the minimal public health package for all Malawians and would help tackle Malawi’s disease burden. Every effort must be made, including improving transparency and revising laws, to curtail IFF and moderate tax incentives.
