Vehicle taxes set to boost Govt revenue
Vehicle taxes set to boost Govt revenue
The Lao government is eyeing import taxes on vehicles as one of the major sources of national income next fiscal year amid the growing purchasing power of motorists eager for luxury goods.
According to a report from the Ministry of Finance tabled at a meeting between the government and provincial governors recently, the government expects to collect 2,574 billion kip (US$321 million) from vehicle import taxes in the 2014-15 fiscal year starting October 1.
The implementation of the vehicle tax policy will be possible as many Lao people now have higher purchasing power thanks to strong economic growth due to rising foreign investment.
The government collects vehicle ta xes ranging from 25 percent up to 150 percent of the value of vehicles, depending on their type and engine . Luxury cars face higher tax charges compared to vehicles which are used for production purposes, such as trucks.
Car dealers including Kolao, Chevrolet and a number of leasing firms in Vientiane are offering various promotions to attract more buyers. One of the promotions which is proving popular allows customers to borrow money with zero percent interest rates if they repay the loan to the bank within three years.
Over the past few years, the government has vowed to collect a car usage tax annually as part of efforts to increase the efficiency of revenue raising measures. However, implementation of the policy never took place as it needs cooperation from all sectors concerned.
The second largest source of import tax is derived from fuel excise, which the government expects to exceed 1,744 billion kip (US$218 million) in the 2014-15 fiscal year. Laos has seen a rapid increase in fuel imports over recent years as the country needs energy to drive economic growth.
The Ministry of Finance has urged the government to limit the quota of fuel exempted from excise next fiscal year so as to reduce the leakage of revenue. In the past, some companies which received a quota to import fuel with zero tax imposed then on-sold the commodity to the public resulting in a huge loss to national income.
The third largest of the import taxes is on consumer goods from which the government expects to generate 751 billion kip (US$93.8 million). Laos imports large amounts of consumer goods from neighbouring countries including Thailand, Vietnam and China to meet demand.
The government a lso expects to collect 113 billion kip (US$14 million) from the import tax on construction materials, as well as 66 billion kip (US$8.2 million) from taxes on imported electronic goods.
In the 2014-15 fiscal year, the Lao government plans to collect 23,793 billion kip and spend some 31,201 billion kip.
vientiane times
