Burma’s opposition leader Aung San Suu Kyi and head of the lower house of parliament Shwe Mann have called for tax reforms following public anger over lax regulations that have allowed more than half of the nation’s potential taxpayers, especially the wealthy, to go scot-free.
“If we want to build a tax culture in this country, every civilian should and must know that the tax system is in the people’s interest,” Aung San Suu Kyi said, speaking at a public forum in Rangoon Tuesday.
“It is the responsibility of the authorities to inform the people of this,” she said as a report disclosed that 70 percent of Burmese people did not pay taxes last year.
“Everybody must be party to taxation. With a solid tax system in place, our country will grow from an important source of revenue.”
The opposition leader, who was elected to parliament last year, said that in addition to a comprehensive plan, the tax system requires a set of laws that would ensure that no person or business entity is exempt from payment.
“First we need to establish appropriate laws for taxation. Only then can we strive to ensure rule of law for the system,” she said.
“The executive branch of government must collaborate with the other branches to do so. The legislative and judicial branches can’t do this by themselves. All branches must strive to ensure rule of law.”
Tuesday’s forum was hosted at the Union of Myanmar Federation of Chambers of Commerce and Industry (UNFCCI) and drew businessmen from various sectors in Burma, who complained about having to pay taxes when many wealthier Burmese with connections to the former military regime were given a pass.
According to statistics from Burma’s Ministry of Finance and Revenue, some 70 percent of Burmese people did not pay taxes in 2012, the Irrawaddy online journal reported.
The complaints at Tuesday’s forum also centered around concerns that Burma’s business faced an uphill battle in competing with their counterparts in Southeast Asian countries with healthier tax laws, as the region seeks to establish a free trade zone by 2015.
Shwe Mann, speaker for the Lower House of Parliament, said that since President Thein Sein’s reformist government took power from the former military junta in 2011, Burma’s tax system had been based on policy, not the whims of powerful officials.
“There [should be] no one who is getting tax exemption or special permission to do business in the country. If there is someone who is getting these opportunities, the system needs to be fixed,” he told the forum.
“If you know of something happening like this, you should submit a report with evidence to the parliament. At that point, we could investigate the case,” he said.
“No one can be above the law or operate outside of the law. The parliament has created laws that are in the people’s interest.”
Shwe Mann pledged to discuss reforms with his fellow lawmakers and said he would collaborate with relevant government ministries to strengthen tax laws.
Some of Burma’s wealthiest power players are missing from a list of 100 top commercial and income taxpayers released by the country’s Internal Revenue Department (IRD) last year, the Irrawaddy reported.
It said that relatively small companies were among the most heavily taxed, while massive conglomerations tied to cronies of the former ruling generals paid relatively little in the fiscal year ending March 2012.
Tobacco and alcohol companies, as well as businesses in a variety of industries including mining, tourism, and banking, were among the biggest taxpayers. Several partly foreign-owned companies, including a joint Singaporean brewery and Thai livestock company were also at the top of the list.
Irrawaddy said that absent from the list of the Burma’s top earners were some of the nation’s largest corporations, including the Htoo Group of Companies owned by Tay Za—a tycoon with close ties to former junta leader Gen. Than Shwe—and Asia World, the country’s largest and most diversified conglomerate founded by former drug lord Lo Hsing Han.
Also missing from the IRD list was the military-owned Union of Myanmar Economic Holdings, a partner in many joint ventures, and most companies associated with the Union of Myanmar Federation of Chambers of Commerce and Industry.
Under Burma’s 2008 Constitution, pushed through by the military regime, companies are required to pay taxes on their earnings.
But in a report last year, Irrawaddy quoted former IRD official Han Tun as saying little had changed under the new government and that “those who were able to avoid paying taxes in the past are still able to do so.”
“The trouble is that enforcement is still very weak, despite the new rules,” he said.
On April 1 last year, the Ministry of Finance and Revenue introduced a new tax system which aims to collect revenue from high earners who will pay little in taxes, while reducing the tax burden on residents with lower incomes.
The system taxes one percent of earnings by individuals and businesses that make up to 500,000 kyat (U.S. $566), with a rate increase of one percent for every additional 500,000 kyat earned.
Reported by Zin Mar Win for RFA’s Burmese Service. Translated by Khet Mar. Written in English by Joshua Lipes.