Revenue still needs to cover project spending: World Bank

Despite economic gains over the last two years, further growth in Myanmar continues to be hindered by inefficient tax collecting practices that has contributed to a government deficit of 3.7 percent in the 2012-13 fiscal year, according to the World Bank.

Khwima Nthara, senior country economist at the World Bank, said last week that tax officers do not have the means to properly assess tax forms on an individual basis while being susceptible to bribery.

This leaves taxpayers to file taxes themselves using difficult-to-navigate guidelines and tax rates provided by the Internal Revenue Department, under the Ministry of Finance and Revenue.

“What is important ... is for the government to take the necessary action whenever this is detected and to introduce a system that makes it difficult for such things to happen,” he said. “We are therefore encouraged that the authorities in Myanmar are strengthening the tax administration system, including through increased taxpayer outreach activities and increased transparency.”

Along with the current issues, government revenues also stand to suffer as a lack of tax officers serving the public, and hence fewer audits, encourages income and commercial taxpayers to cheat on their forms to avoid paying what they owe.

Increased revenues will ensure that the government has more resources available in its budget to spend on development priorities, including infrastructure projects such as roads, power and irrigation, but also to provide more and better services such as in health and education, Mr Nthara said.

Myanmar’s fiscal deficit reached US$443 million in the first half of the 2013-14 fiscal year, according to state-run media. Earlier estimates show the deficit declining to 3.7 percent of the gross domestic product in the 2012-13 fiscal year, down from 4.6pc the year before, according to a report released by the World Bank earlier this month.

Tax revenues, meanwhile, increased from 3.9pc of GDP in the 2011-12 fiscal year to 6.4pc in 2012-13, although the underlying factors behind this strong tax revenue performance are not clear, it continues.

The Ministry of Finance and Revenue is in the process of establishing a large taxpayer office (LTO), which is targeted for completion early next fiscal year. The office will collect information on large companies in an effort to stop them from evading tax, it was revealed at a ministry press conference in September.

The Internal Revenue Department collected about K1.57 trillion ($1.62 billion) in the 2012-13 fiscal year, and is targeting about K2.2 trillion in the 2013-14 fiscal year, which ends in March.

source: The Myanmar Times
http://www.mmtimes.com/index.php/business/8601-revenue-still-needs-to-cover-project-spending-world-bank.html