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Afghan Government  to Collect Income Taxes - 2004-04-17

This year, many Afghans will experience something they have never seen before - an income tax.

Most Afghan regimes in recent history have relied on customs duties and taxes on specific high-profit items, such as opium.

But as the country's new government seeks financial self-sufficiency, it has decided to adopt a Western-style tax code, including an income tax on its residents.

With the passage of a new revenue law last month, the central government is now setting out to collect taxes from anyone making more than 12,000 afghanis, or about $200, per month.

Deputy Finance Minister Ghulam Jelani Popal, who heads the new tax campaign, says most Afghans earn far less than this and will not be affected.

But he says the rest will now have to give up between 10 and 20 percent of their income, or face criminal charges.

He says one target of the new system is the large community of foreign aid workers employed by local and international non-governmental organizations, or NGOs.

"There's a lot of international community [in] existence, a lot of Afghan and international NGOs," he said. "They get a decent salary, but also they don't pay anything in terms of taxes."

He says enforcement of the income tax will be based on random audits by his ministry.

The new law also plans to tax the profits of landlords and currency exchange dealers. Most of the central government's revenue, however, will still come from customs receipts.

Mr. Jelani says customs revenues are much less than they should be due to rampant smuggling, a situation that is not likely to change in the near future.

"We think that this problem will continue for some time, and gradually, when the central government takes more control of the borders and gets rid of all the warlords, more income and revenue will flow to the government accounts," said Ghulam Jelani Popal.

He says he expects total revenue to rise to $300 million this year, compared to $200 million last year.

These numbers are small compared to the almost $4.5 billion Afghanistan is expected to receive this year in foreign aid.

But, Mr. Jelani says, large amounts of aid will not continue forever, making this the right time to introduce Afghans to the concept of income tax.