Economy

Tax Rise Plans Prompt Worries Over Wasteful Spending, Transparency

By Tha Lun Zaung Htet 8 March 2013

The Burmese government will increase taxes in the coming fiscal year in a bid to raise an additional 461 billion kyat (US $577 million), the Ministry of Finance said earlier this week.

But critics of the announcement said the additional funds should be spent on social programs, rather than on military equipment and fancy cars, which they allege is the goal of the government.

Win Shein, minister of finance and revenue, said in a parliamentary meeting this week that the government will increase the current five percent tax rate, leading to a tax income for the next fiscal year of about 2.4 trillion kyat ($2.9 billion), compared with 1.9 trillion kyat ($2.3 billion) in 2012-2013.

New taxes will be imposed in a number of sectors, some of them hot topics in the newly developing country, such as land, water, minerals, forestry and rubber plantations.

Economists speaking to The Irrawaddy cautioned against the move, saying that any plan to increase taxes should come with a clear spending policy on social development.

The analysts said the government should stop raising taxes when it runs out of money, which it spends too freely on military-grade hardware, such as armored cars.

They also said it should draw on the vast wealth of major corporations investing in Burma, and military-owned companies, such as Union of Myanmar Economic Holdings Limited.

Dr Maung Maung Soe, a retired professor of economics at Rangoon’s University of Distance Education, said the Thein Sein administration had appropriated too much money for unnecessary security spending, including buying luxurious bullet-proof cars.

“The government will spend over 1.8 billion kyat [$2.25 million] for buying five bullet-proof cars and other new vehicles, and 2 trillion kyat [$2.6 billion] on the military. Could it reduce those expenses?” Dr Maung Maung Soe asked.

“In fact, collecting taxes should encourage an economic system that would build up people’s standard of living. Otherwise, if the administration collects taxes whenever it needs money, it will be like an extortion racket,” said the retired professor.

On March 7, the government announced it was granting the military a budget of $2.4 billion, a little over 12 percent of total government spending in the poverty-stricken country.

Burma has one of the world’s lowest spending rates on health care, standing at about 1.8 percent of the total state budget, according to a 2009 UN report.

Win Shein said in the future, the government would make the revenue of the Energy Ministry and the Ministry of Mining more transparent, which some greeted as a positive move.

Kyi Myint, an independent Lower House member from Rangoon’s Latha Township, thinks the Finance Ministry will become more transparent in the coming years.

“Throughout the military rule in our country, revenues from oil and gas and extraction of minerals and other natural resources were spent without any transparency,” said Kyi Myint.

“Because of consultation with other ministries, revenues will be more transparent, which means that we will be able to see in coming years how much money they can generate. This is a real big change.”

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