Imposing an additional tax on a specific good or service results in the reduction of its use. Generally, this is recommended for demerit goods such as alcohol and tobacco. In Myanmar, the government appears to believe telecom is a demerit good, collecting a five percent tax from all telecom bills since April 2016. The President says it will be used in sectors that “directly help people.” But this report shows that all funds collected after April have gone to general expenditures of government.
There is no justification for this kind of taxation on a rapidly growing sector. It would be much better to leave that money in the pockets of the telecom users who are the best judges of what would “directly help” them.
The government collected more than K52 billion from the commercial top-up tax from three telecom firms in eight months this year – a monthly average of about K6.5 billion, the Internal Revenue Department has said.
The top-up tax collected for November was about K6.7 billion.
“We gave the taxation earned in April to the education sector. We added taxation earned later to state funds,” Director General of the Department Min Htut said.
Most of the money was earned by Myanmar Post and Telecommunications (MPT).
President Htin Kyaw said the government would spend money collected via the commercial top-up tax in sectors that could directly help people.
Telecom firms collected a commercial tax from mobile users from April 1 after the Union Parliament approved a bill to collect a 5 per cent tax in accordance with the Union Tax Law 2016.
The tariff is a burden for mobile users who can only afford K1,000 top-up cards.