Finance minister proposes lowering tariffs to address revenue loss
Finance minister proposes lowering tariffs to address revenue loss
Financial leakages could be reduced if the government imposes lower tariffs on imports and exports, according to Finance Minister Mr Phouphet Khamphounvong.
The minister said the lower tariffs would create an incentive for traders to pay the tariffs based on the country's laws, instead of bribing officials to help them evade payments.
Mr Phouphet proposed the idea at the ongoing session of the National Assembly, saying that lowering tariffs would encourage traders to follow legal processes, and all their money could be utilised for national development.
The minister found that there were more cases related to the evasion of tariff payments along the border areas due to incomprehensive management mechanisms, leading him to propose the idea.
So far, over 2,000 cases relating to the evasion of customs duties have been documented, of which about 300 cases were reported in 2011-12, the majority of them concerning imported vehicles.
In fact, the revenue obtained from customs duty fell short of the target over the past eight months of 2011-12, due to weakness in financial management.
Many traders declared the value of their imported goods to be lower than they actually were, leading to shortfalls in tariff payments, according to a government report released recently.
Dr Liber Libuapao, a senior economist at the National Economic Research Institute, said yesterday that he fully supported the minister's opinion to lower tariffs on imports and exports to encourage traders to pay tariffs in accordance with the law.
He said tariff reductions could not be avoided once the Asean Economic Community is established in 2015, allowing the free flow of goods in the region in order to promote trade and investment.
“We can start lowering tariffs from now on but we need to prioritise which products will carry a lower tax,” he said, adding that the lower tariffs would not impact on goods produced domestically.
Dr Liber said the government could reduce the tariff to five or zero percent from now on for goods that Laos cannot produce, as this will be beneficial to local consumers and help to curb inflation.
“I accept that lowering tariffs will cause some losses to national revenue but it will help to lower the cost of production and make prices are lower while helping Laos to address rising inflation,” he said.
Dr Liber said high tariffs are a barrier to economic growth and development in Laos and encourage traders to evade paying the tax by bribing officials, who reduce the payment.
He forecasted that financial losses from tariff evasion could reach about 10 percent of total tariff payments as a whole.
Some NA members agreed with lowering tariffs and said it was necessary to facilitate commercial production and create job opportunities.
Total revenue collection in Laos over the past eight months has reached 10,568 billion kip, equal to 66.5 percent of the plan for the year, which is an increase of 11.4 percent compared to the same period last year.
vientiane times
