Burma’s Bizarre, Bullying Tax Collection System

(WILLIAM BOOT/The Irrawaddy) BANGKOK—Tax collection in Burma is made by anyone in a uniform—police, soldiers, navy, militia, customs inspectors—but almost none of it is recorded or put to use for the public good.

The arbitrary money grab is often nothing more than a source of extra income for the collectors, says a comprehensive investigation of Burma’s medieval-like tax quagmire.

“People all over the world are dissatisfied and complain about the taxes they are obliged to pay. However, the [Burmese] military has transformed taxation from a routine and legitimate function of government into extortion and a tool of repression,” the Burma Network for Human Rights Documentation, a Thailand-based NGO, alleges.

Much of the random tax is illegally collected at checkpoints on roads, rivers and at ports and land borders manned by soldiers, sailors, police or customs officials.

It ultimately undermines business and trade across the country and pauperizes the people.

In Kachin State, 18 different state-linked groups were logged taking money or goods at three “security” checkpoints.

The result often leads to the collapse of trade and transport businesses which are financially bled to death, concludes the report “The Hidden Impact of Burma’s Arbitrary and Corrupt Taxation.”

It provides a chilling view of the state of Burma’s economy only weeks before national elections billed by the ruling junta as paving the way to reform.

“We do not expect that people’s lives will improve after the elections planned. The military is poised to maintain control over the political life of the country. Its plan to transform the armed opposition groups into a border guard force and various militias will maintain the militarization of Burmese society—a system largely paid for through arbitrary taxation,” the report says.

The Burma Network for Human Rights Documentation, known as ND-Burma, commissioned economists from Australia’s Macquarie University Burma Economic Watch unit to carry out the tax investigation, which was funded by two agencies in the United States, the National Endowment for Democracy (NED) and the Open Society Institute.

The NED is funded by the US Congress while the institute is financed by billionaire investor-philanthropist George Soros.

The report is the result of an investigation conducted over two years. It stems from an inquiry by the NGO into what was the biggest threat to Burma’s economic health and human rights among the country’s population of more than 50 million people.

“None of us expected at the beginning of the exercise that we would end up focusing on taxation and its corruption,” said the authors.

The ND-Burma study concurs with two other recent reports on the state of Burma’s economic health as the junta’s manipulated elections loom, scheduled for Nov. 7.

Officially recorded collected tax figures for the 2009/10 financial year record a modest increase—but to a laughably small US $1.1 billion.

This is translated by the junta’s Central Statistical Organization as being $193 billion at the official exchange rate, said a report in August by the Economist Intelligence Unit.

Revenue from customs duties actually slumped by more than 46 percent compared with the previous year, according to figures obtained and interpreted by the EIU, to a mere $44 million at the free market adjusted rate for the local currency.

“Although the junta is now accruing substantial earnings from natural gas exports, little appears to be finding its way into official government coffers,” said the EIU. “Anecdotal evidence suggests that extensive off¬-budget military spending has continued in recent years.”

An Australian expert on Burma’s economy is more scathing: “Taxation arrangements are chaotic, arbitrary, in large part out of the control of central authorities, and singularly inefficient in either collecting sufficient tax revenues or in imposing reasonable and non-distortionary costs on productive enterprise,” said Sean Turnell, a senior professor of economics at Macquarie University in Sydney.

Methods of assessing personal or household tax by self-appointed town council collectors are mostly unorthodox but also utterly bizarre, said Turnell in his report, “Burma’s Macro-Economy at the Cusp of the 2010 ‘Elections.’” They include deciding the size of tax payment based on the digits of a household’s telephone number, he said.

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