MPs urge gov­ern­ment to adopt ‘fis­cal fed­er­al­ism’ when col­lect­ing taxes

The Myanmar Times - - News - SWAN YE HTUT swanye­htut@mm­

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

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