MPs urge government to adopt ‘fiscal federalism’ when collecting taxes
MPS are lobbying for a more clear-cut, equal tax system that would raise the tariff for the wealthy and see cuts for poorer states.
Pyidaungsu Hluttaw debated untangling the tithe on July 28 after the Public Accounts Joint Committee presented tax receipts for the second half of the 2015-16 financial year.
“The tax receipts collected for 201516 total K2327.339 billion while the target was K2335.434 billion, so the overall success rate was 99.65 percent,” said Deputy Minister for Planning and Finance U Maung Maung Win
But lawmakers called for the government to clean up the mercurial tax collection system.
“The government needs to levy a higher tax rate on citizens and businesses with a high income,” said lower house MP Daw Thet Thet Khaing (NLD; Dagon). “To collect taxes more systematically it should be decentralised, with the collection responsibility shared among the central government, the state and region governments, and the township-level administration. This is fiscal federalism.”
According to Daw Thet Thet Khaing, in countries that practise fiscal federalism, township-level administrations collect taxes on property transactions, while the state-level government collects commercial tax.
She added that the development of states and regions could be assisted by levying taxes proportionally to income - more developed regions such as Yangon should have higher tariffs, while taxes could be cheaper in Chin State.
Myanmar has what one 2015 Asian Development Bank working paper called “one of the lowest levels of tax yield in the world”, and, as Daw Thet Thet Khaing pointed out, the government expenditures typically exceed the collected income.
Myanmar must no longer rely on unsustainable resource extraction for the bulk of the state’s income, but instead improve the efficiency of tax collection, said Daw Khin San Hlaing, another lower house MP (NLD; Palae).
“Today, Singapore stands proudly as an economic power and a strong society. It found that through tax revenue it could provide for the development of the country and the government’s expenditures,” she said.
U Myat Nyana Soe, an Amyotha Hluttaw MP (NLD, Yangon 3) and secretary of the Public Accounts Joint Committee, suggested taxes on consumable, unhealthy items such as cigarettes and alcohol should be increased as both a disincentive and to boost state income. He added that limited natural resources such as timber, gemstones, oil and gas should also be heavily taxed.
Tax breaks on the other hand should be offered to those in the manufacturing business in order to boost trade, he said.
“In other ASEAN countries the tax rates are announced every year and businesses can plan adequately,” he said.
In their debate, MPs pushed to adopt a framework for setting tax rates that would avoid a wide annual fluctuation.
The Union Tax Law 2016, approved by the Union Solidarity and Development Party-led parliament on January 25, set the tax rate for the coming fiscal year.
The Internal Revenue Department announced income under K4.8 million a year will now be tax-exempt, up from K2 million in the previous fiscal year. Income between K4.8 million and K5 million will be taxed at 5pc, income up to K10 million will be taxed at 10pc, income up to K20 million will be charged at 15pc, income up to K30 million will be taxed at 20pc, and 25pc tax will be charged on any income above K30 million.
– Translation by Thiri Min Htun