What your tax money can do?

How much you’re paying the government and what you get back

Posted by Htin Kyaw Aye on June 7, 2018

There are two competiting questions in Myanmar’s public life today. The first common one in our teashop talks of ‘politics’ or ‘government’ is, “Do you pay tax?” It was subsequently complemented by another question mark, “What good would a little more pennies of my tax money do?” Here is the good news. Your tax money can run two ministries - education and health.

In addressing the question of “Do you pay tax?”, it falls back to even more questions of what kinds of taxes we are bound to pay and how could we pay. Putting it simply, we as ordinary citizens normally pay three types of taxes which are income tax directly levied from your salary or earnings, commercial tax collected from your purchase of goods and services and property tax paid every six months for your housing and commercial properties as either owner or tenant. You might not pay income tax for certain numbers of reasons which include the legitimate one of not earning more than 2 million MMK in one year. It’s also possible that you don’t pay property tax because you don’t own a house or your landlord pays the tax. Still you pay commercial tax for sure in your day to day purchase of food and utensils and so on. You got a bill from a restaurant, a convenience store with tax stickers. You got 5% deducted from your mobile top-up. You got a sticker on cigarette pack or on liquor bottle. All of them are commercial tax you pay to the government. According to a recent survey by the Asia Foundation, 45% of respondents say they pay the commercial tax while meagre 11% pay the income tax.

You would wonder your individual contribution to the state revenue wouldn’t count for anything noteworthy in operating the public services delivery. That’s not true. Income tax and commercial tax combined could comfortably fund the Ministry of Education and the Ministry of Health and Sports. The government have seen a significant increase in tax revenue in 2015, it could be attributed to the introduction of new tax rates through Taxation Law in 2014. It means we have been paying more tax than before since 2015. Then it would merit another look into the government works, are public services becoming better? Don’t easily swayed by the increase in social spendings in 2018, it was partly because of the merger of different ministries, for example, the Ministry of Sports is integrated into the Ministry of Health.

Apart from funding the Ministry of Education and the Ministry of Health and Sports, our tax payment contributed largely to the entire government revenue. They count for more than half of the entire Tax Revenue collected by the central government.

You might remember that the Asia Foundation survey shows convincing 63% of the respondents say they pay the property tax. There would be a question why we don’t consider the most familiar form of tax in calculating the funding possibilities for social spendings. There are two reasons. One reason is the property tax are collected by the state and region governments who provide limited social services. It’s the central government agencies that run schools and clinics. Another reason is its contribution to the government budget is quite small, compared to the other two, despite wider familiarity. It counts only 0.03% of the country’s GDP.

The last question to address is how could you know whether your tax money is spent well in providing better social care. It requires vibrant demands from the part of citizens, taxpayers for spending the public money efficiently and effectively, in most needed areas. It requires “You” to keep an eye on and to make a voice.