Higher fuel im­port taxes to be tabled

The Myanmar Times - Weekend - - Business - CHAN MYA HTWE chan­myahtwe@mm­times.com Busi­ness 13

THE Myan­mar Fuel Oil Im­porters and Distributers As­so­ci­a­tion will sub­mit the par­lia­men­tary pro­posal urg­ing the gov­ern­ment to raise the Special Com­modi­ties Tax on fuel im­ports, U Win Myint, sec­re­tary of the as­so­ci­a­tion, told The Myan­mar Times.

The move comes af­ter a spike in lo­cal fuel con­sump­tion and im­ports.

For the first six months of the cur­rent fis­cal year, Myan­mar has im­ported up to 1.73 mil­lion tonnes of fuel worth some $1.3 bil­lion.

In com­par­i­son, the coun­try im­ported al­most 1 mil­lion tonnes of fuel dur­ing the same pe­riod last year, ac­cord­ing to U Khin Maung Lwin, deputy sec­re­tary of the Min­istry of Com­merce.

Cur­rently, there are no spe­cific tar­iffs or quo­tas on fuel im­ports to Myan­mar. This has re­sulted in ris­ing im­ports over the years as the num­ber of ve­hi­cles in the coun­try also in­creases. Myan­mar im­ports most of its fuel via sea. How­ever, trade also takes place at bor­der towns such as Muse.

Around 70 lo­cal and for­eign com­pa­nies are now ac­tively par­tic­i­pat­ing in the fuel im­port busi­ness.

Im­port con­trols U Win Myint said it is nec­es­sary to con­trol the na­tion’s spend­ing and reliance on fuel by re­duc­ing con­sump­tion.

“Fuel im­ports have risen sub­stan­tially and more and more of the coun­try’s in­come is spent on it,” he said.

“As we can­not re­strict im­ports, we need to re­view how we can re­duce fuel con­sump­tion. One way to do so is to study how other coun­tries are deal­ing with this prob­lem,” he added.

Typ­i­cally, coun­tries man­age fuel im­ports by im­ple­ment­ing a Special Com­modi­ties Tax on the quan­tity sold. In Sin­ga­pore and Thai­land, the Special Com­modi­ties Tax is as high as 20pc, but it is only 5pc in Myan­mar.

“In Myan­mar fuel is cheaper be­cause of the low taxes im­ple­mented by the gov­ern­ment,” U Win Myint said.

Con­se­quently, the coun­try has been con­sum­ing more and spend­ing freely on im­ported fuel.

In the Yan­gon mar­ket, the re­tail price of diesel fuel was K745 per litre in Oc­to­ber, while high-qual­ity diesel was sold for K765 per litre, ac­cord­ing to gov­ern­ment data.

Diesel prices in the Man­dalay mar­ket were K770 per litre, while a litre of high-qual­ity diesel was worth K790.

By rais­ing the Special Com­modi­ties Tax, Myan­mar will not only be able to con­trol the im­port of fuel. It can also raise rev­enues to cover the costs of re­pair­ing road dam­age caused by cars as well as re­duce pol­lu­tion and en­vi­ron­men­tal dam­age.

As such, Myan­mar should raise its tax on fuel im­ports to 20pc to be on par with other coun­tries.

“If we change our Special Com­modi­ties Tax af­ter study­ing the taxes in other coun­tries, the coun­try will earn ap­pro­pri­ate rev­enues and fuel con­sump­tion will be un­der con­trol as prices will rise,” U Win Myint said.

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