OPINION: Healthier coffers, public confidence concrete benefits of cashless tax collection
VIENTIANE (Vientiane Times/ANN) - Members of the public have been among those to welcome the collection of road taxes via BCEL Bank’s electronic systems.
The new Presidential Decree on Road Fees was signed by President Bounnhang Vorachit on September 20.
Under the new electronic system, vehicle owners who fail to pay the 2017 road tax will be fined and also be forced to carry out retroactive payments for 2017 in addition to the road tax obligations for 2018.
According to statistics from the Tax Department, Laos has some 1.8 million vehicles, but typically only some 30 percent of vehicles have had their road taxes paid each year.
In Vientiane alone, some 843,500 vehicles have been registered so far excluding those belonging to national defence and security forces, according to a report from the Vientiane Vehicle Control Unit.
With a population of some 850,000, the capital city is very close to having an average of a motor vehicle for every single resident including man, woman and child.
In the two months since the new rate of the road tax came into force, over 10 billion kip had been amassed, far exceeding the set plan.
This is a benefit of a more transparent and accountable system, with all monies accruing directly to the national budget.
The system specifies the names of owners, their registration numbers as well as the amount of tax due for various types of vehicles.
Despite this, only 10 percent of vehicles in Laos have seen their annual road tax obligations paid so far, BCEL Bank General Managing Director Mr Phoukhong Chanthachack told Lao media last week.
Should all due road taxes be paid, the state would enjoy a tremendous increase in the amount of revenue amassed from this sector.
All people in Laos are obliged to pay taxes as stipulated in laws passed under the nation’s constitution, no matter whom they may be.
So how can we encourage all vehicle owners to pay the road tax in a timely fashion?
Of course, an information campaign is critical to ensure that all understand their obligations.
Some say the Ministry of Finance might need to work in cooperation with traffic police.
Relevant officials can be assigned to places where police check vehicles.
Those who fail to pay the road tax will be asked to pay it at the site.
Tax payment tickets can be issued in the vicinity to make it easier for vehicle owners to pay.
When asked, many members of the public agree that collecting road tax through electronic systems is a positive move.
Indeed, many want the government to introduce such more widely to garner similar benefits from other sectors, including land taxes and fees for the use of state property and related assets.
Economists and analysts have found that the country still possesses a vast potential to increase revenue collection relating to land usage.
Until some 6-7 years ago, the collection of land taxes and fees was the responsibility of the National Land Management Authority (NLMA).
In 2009-10, the revenue collected by the NLMA through various land fees reached 130.7 billion kip and in 2010-11, the NLMA took in at least 131 billion kip.
When responsibility for land taxes and fees was transferred to the Ministry of Finance five years ago, less than half of the previous income from this source was collected annually.
Why? There is still no official report about how much revenue is collected from land annually.
In the interest of fairness and equity, those who hold title to or use the nation’s land must pay taxes due on it to the national budget.
Analysts are confident that if land taxes and fees are gathered through an electronic system, the nation will obtain the massive revenue increases due from this source.
These funds can accrue to the national coffers directly, with less chance of unwelcome leakages.
Addressing the National Assembly session in October, Deputy Prime Minister and Minister of Finance, Somdy Duangdy highlighted the importance of introducing and expanding the use of electronic systems to gather taxes.
He said electronic systems are being installed at convenience stores, restaurants, noodle soup shops, hotels and other service providers in Vientiane to collect value-added tax (VAT).
If all companies, stores and shops turn to cashless tax payment systems, it will make it much easier for the government to collect due taxes and manage the money in circulation in the economy.
Worldwide and in domestically, the introduction of mechanisms or measures that reduce reliance on cash-based collection have often had the benefit of revealing additional sources and volumes of taxable revenue.
As such, payment of all taxes ought to be possible via transfers from bank accounts.
It seems that data and systems are critical so that government sectors must share information regarding those who have already paid taxes and those who haven’t yet done so.
Tax officials will then have more time to pay greater attention to their roles in examining and ensuring business units undertake their obligations entirely based on the laws.
It’s high time for all tax to play their parts in providing information and contributing to campaigns encouraging all taxpayers in Laos to diligently follow the tax law to fund national development and poverty reduction efforts.
In this way, our nation can raise the revenue needed to boost development and proceed efficiently toward graduation from least developed country status by 2020 and beyond.