Tax hike on vehicles, fuel, alcohol, furniture, meat, electronics and textile proposed in Tax Bill
As part of the fiscal measures to curb the Indian Rupee (INR) shortfall and enhance Bhutan’s balance of payments with India, the government has proposed to increase taxes on imports of non- essential items.
Introducing the Tax Bill in parliament yesterday, Finance minister Wangdi Norbu said despite the foreign currency shortfall, government couldn’t take immediate action without a parliamentary session to use fiscal tools. He said the bill is hereby submitted to the parliament as a money bill and expressed hope of support from the members.
Lyonpo Wangdi Norbu proposed for ‘green tax’ to be levied on vehicles, fuels, refrigerators and air conditioners among others, ranging from 5% to 40%.
He said despite having roads in almost all corners of the country, the government in a move to control imports has proposed to limit the number of vehicles by levying green tax on vehicles which are more luxurious such as those with engine capacities of 1,800 cc and above. The tax however will not apply to vehicles used on rural roads.
In order to control the fuel outflows and control overall import volume, a green tax of five percent has been considered for levy on fuel including LPG. Green tax of 10% shall be levied on refrigerators, freezers and air conditioners which the minister said is in the interest of national economy and environment preservation.
Other tax revisions include levying an excise duty of 50% on domestic as well as imported alcohol products since the product has been identified as injurious to health and a burden to the INR reserves.
To curtail demand for meat, fish and eggs, sales tax revision from zero percent to five percent has been proposed. It has been observed that these three items worth Nu 631.72mn was imported during the year 2011 alone. The minister also cited cases of attempts by traders to over-value the tax free goods in the invoices to avail more INR from banks.
Sales tax and custom duty rates on non-essentials such as silk fabrics, furniture and power chainsaw which has been tagged non-essentials has also been proposed. This has been done in order to reduce demand and thus help to control foreign exchange outflows.
The National Assembly (NA) speaker Jigme Tshultim said the house will deliberate on the bill on June 25 and 26.