Laos - Politics, government, and taxation

The Lao PDR remains a 1-party state with complete dominance by the Lao People's Revolutionary Party (LPRP). The president since 1998 has been Khamtain Siphandon and the prime minister has been Sisavat Keobounphan. The National Assembly, last elected in 1997, has 99 members. Basic economic policies are determined in major Party Congresses which are held every 5 years. The LPRP is strongly supportive of the current mixed policy of having a privatized economy with a reduced role for state-owned enterprises but with a 1-party political system.

As part of the reform policies introduced in 1986, the government has attempted to reduce the size of the public sector , including the military. They have done this, however, in humanistic ways by avoiding the direct firing of people. International donors and agencies have been concerned that such reforms have slowed in the late 1990s.

The government's ability to tax is limited. Tax revenue is only 10 percent of the GDP, and major capital outlays are financed by external assistance, according to Bourdet. Major sources of revenues are business taxes, import/export taxes, and various fees (such as visa fees and fly-over fees). For smaller businesses, flat fixed taxes are used, which discourages tax evasion. In 1995-98, tax on foreign trade represented 27.1 percent of government tax revenues. The income tax represents only 6.3 percent of all revenues.

The government plays an active role in evaluating and assessing potential international investments coming into the country. The government, with the strong support of the Lao Women's Union, has been active in preventing the development of a commercial sex industry. At this point, there is absolutely no standardized fast food industry in the country, such as KFC or McDonald's. Interestingly, in terms of the cola wars, Laos is a Pepsi country. Coke must be imported from Singapore or Thailand.

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