Myanmar Needs to Forgive Tax Dodgers

Whether motivated by greed or virtue, granting a one-time tax transparency amnesty to past evaders will help the country’s economic and political transformation.

With the new Yangon Stock Exchange (YSX) set to open in less than five months, now is good time to reflect on, not just the political liberalisation of Myanmar away from military authoritarianism and towards democratisation, but also on the evolution of the economic sphere.

And in particular, increased transparency.

A successful national bourse requires more than a modicum of transparency. “Transparency” itself can mean more than one thing. Openness to outside investigation, whether it be a corporation’s financial statements or a government bureau’s budget, can be a good thing or a bad thing depending on the situation.

However, I argue that there is more good to be had — that is, not just more economic efficiency or effectiveness, but genuine honesty in the development process — if something like a “tax transparency amnesty” for domestic businesses in Myanmar were promulgated by a democratically elected parliament.

We all understand that “politics” and “money” often intersect, particularly at the commanding heights of a national state. Some manifestations of the politics-money nexus are useful whilst others are more than a little depressing; but there is one avatar in particular that is a scourge on Myanmar’s political economy. A tax transparency amnesty could prove analgesic to that still lingering sick-man of Myanmar’s economy: the crony capitalist.

If cronyism between government and businesses is one type of economic activity that could use a dose of transparency, Thomas Fuller’s recent piece in the New York Times is a dismal reminder of another kind of less-than-ideal investor-backing for some of Myanmar’s corporate entities. Illicit trading of items like poppy (now often as methamphetamine), timber, and precious stones are hidden on the former balance sheets of more than a few companies. A tax transparency amnesty could prove useful here as well, helping to highlight wealth and income that is more or less clean (though underreported in the past), whilst also reasserting the illegality of some commercial goods.

But what exactly is a “tax transparency amnesty” and how would it work?

A tax transparency amnesty would be a one-time opportunity for businesses and individuals to declare past hidden income or wealth for an agreed upon fee. Regardless of where the funds came from, all money in the system would be declared white: everyone would get a clean set of books.

The one-time fee would probably be a… [click here to continue to read full text]

*Originally published in New Mandala by T. F. Rhoden; photo credit goes to Dustin Main. Unless otherwise stated, all posts on this website are under Creative Commons licence. white-compass-rose-th

Myanmar’s Military Still Hold the Purse Strings

The release of the official list of Myanmar’s 1,000 top taxpayers for 2013-2014 shows the wealthiest are still overwhelmingly tied to the old guard of military cronyism and elite government corruption. Many are on the US government’s blacklist.

The list, released by the Internal Revenue Department (IRD) of the Ministry of Finance in December, is an indication of how much – or how little –progress the Burmese political economy has made in terms of the separation between civilian versus military investment in Myanmar’s highest grossing companies. The reporting process remains frustratingly opaque to investors.

Despite the move away from military authoritarianism toward more democratic institutions in government in the political sphere, a similar move away from military-tied businesses which either have ties to or a part of the military toward completely independent trade, investment, and entrepreneurship in the economic sphere has yet to really begin.

The three public companies along with top taxpayers on the Internal Revenue Department lists serve to highlight the continued challenge of transparency and continued involvement of investments tied to military families.

For example, AGD Bank is part of the Htoo Group of companies, which has included at various times numerous other subsidiaries like Air Bagan, Htoo Wood Products, Elite Tech IT Services, Htoo Trading, and many others. The chairman of this conglomerate is U Tay Za, well known for his ties to the military elite, particularly Than Shwe, the former general who headed the junta from 1992 to 2011.

Both U Tay Za as an individual and his portfolio of companies are blacklisted by the United States government. For better or worse, this designation ends up trickling down to Htoo Group’s 30,000- odd employees and illustrates how cronyism at the highest levels becomes a system-wide problem affecting the middle and lower classes.

In fact, a comparison of the… [click here to continue to read full text]

*Originally published in Asia Sentinel by T. F. Rhoden; photo credits for image used in post appear on New Mandala. Unless otherwise stated, all posts on this website are under Creative Commons licence. 

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