- May Thandar Win
In Nay Pyi Taw, preparations are now well advanced for finalising the budget and Union tax law which will establish the Government’s revenue-raising and spending priorities for the 2017-18 financial year. It is an annual event that always encourages advance speculation. But this year it is being more eagerly anticipated than usual because it provides the first unequivocal indication of what the detail of the NLD’s economic outlook will really mean for Myanmar. Where will the balance be struck between raising more money to pay for better public services yet not taxing so heavily that the money emigrates to other countries that tax it more leniently?
All over the world, politicians and economists argue about the level at which tax and regulations stop improving living standards and start harming them. In Myanmar, the debate is particularly intense. This is because there is widespread agreement that the Government needs to spend more on public services but also that tax evasion is widespread and the bigger the tax burden the more likely that people will seek ways to avoid their legal obligation to pay it.
As decision time in Nay Pyi Taw draws near, what do Myanmar taxpayers think is a fair and reasonable amount to contribute? The answer of course depends upon who is asked and whether they think higher tax is a good idea only if someone other than themselves is forced to pay it. In this debate, the perspectives of four current taxpayers for whom the budget could have a major effect on their personal and professional lives offers some clues.
Daw Aye Thida, managing director of Ngweinzali Audit firm is familiar with the tax concerns of her clients but certain that tax evasion is indefensible. “I would like to urge every citizen to pay tax. As a fledgling modern economy, Myanmar needs tax to build the country’s developments and infrastructure projects,” she says, “and we also need to pay decent salaries to government employees in important sectors like education and health.” Whilst she believes the current tax rates “are not high compared to some international rates, I don’t think our rates should be either increased or lowered in the coming budget.”
Daw Aye Thida is passionate about encouraging individuals and companies to pay their fair share, but some tax advisors enrich themselves by ensuring their clients dodge that obligation.
Ma Youn Mee, owner of the Empress beauty salon and spa in Yangon, dutifully pays her taxes despite being aware that she could pay less in return for offering a bribe. She says that small business owners often find it difficult to get the right information on tax payment and that they “want to avoid tax offices and government ministries as much as possible because of the unfriendly manner and complicated procedures. I would like these difficulties to be lessened. This would discourage the culture of overcoming barriers by bribing accountants and officials.”
In the coming budget, she says that “I wish the government could enact and enforce some rules and regulations on wiping out this corruption and reducing the complicated procedures for tax payers.’’
Regulation and the cost of compliance can be disproportionately time-consuming and burdensome for small business owners like Ma Youn Mee, but they are also a concern for large scale employers. “I would like to urge the government to expand the coverage of collecting tax at the base rather than just targeting only the prominent figures or businesses” says Dr Maung Maung Lay, vice president of the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI). He believes that only a tax system that is comprehensive and broadly based can prevent a budget deficit that “will create inflation which will be a huge impediment for the country’s future” and at the same time raise sufficient revenue for what he describes as “everyone’s wish” which is “a bigger budget for health and education.”
Aung Moe Kyaw, Group Chairman of the beverages company, IBTC which includes Grand Royal whisky, also accepts the responsibility for successful companies to make a fair contribution. “We are fully supportive” he says, “of the existing tax rates and structure, especially the Special Goods Tax while all domestic producers transition towards full compliance.”
Indeed, his company – which employs more than 2,000 people – has consistently been one of the top commercial taxpayers in Myanmar, contributing over MMK 200 billion (almost USD 200 million) over the previous five years to March 2017.
His budget hopes are not pinned upon asking for a lowering of tax rates but rather that the existing burdens should remain stable and consistent. “Uncertainty about what level of tax and regulation we will face in two, four or six years’ time,” he says, “is what makes it difficult for companies like Grand Royal to plan future major investments in developing new products and creating more jobs.”
Aung Moe Kyaw fears that a combination of “complicated regulations and higher taxes alongside inadequate enforcement would harm law-abiding businesses yet give a huge advantage to counterfeit or illegally smuggled trade which avoids health safeguards and pays no tax. The result,” he says, “would leave consumers with fake or dangerous products and the Government with less tax to spend on the services we all need.”
For all their different priorities, what is noticeable is the extent to which these four taxpayers agree that the Government’s priorities should be schools, hospitals and infrastructure which should be paid for not by adjusting the tax rate but by better enforcement of the existing levies. In Myanmar, fiscal policy is not just about economics but also cultural attitudes and the means of enforcing existing burdens rather than creating new ones. It is a problem that State Counsellor Daw Aung San Suu Kyi herself addressed in April 2013 when she observed, “if people are to abide by the taxation law and pay tax and tariffs responsibly, the law and the rates themselves must be acceptable for the people and suitable for the country.”