Local taxes for local development

The Property Tax Bill is a long due up gradation of the land and property taxes stuck since 1992.

However, what does not make sense in this bill is the provision to transfer the local land and property taxes collected so far in local government CD accounts into the central government revenue account.

This completely violates the very essence of local governments, local governance and accountability.

World over, local land taxes are collected as local taxes by local governments.

All local residents and especially Thromde residents, will pay taxes directly or indirectly in the form of land tax, tax on rents etc.

So, in return, after paying the much higher land and property taxes the local residents of either Thromdes or Gewogs will expect better services like water supply etc.

For example, Thimphu is a city of around 100,000 plus people and growing rapidly, and so it needs every tax revenue it can get if services are to be maintained or improved.

However, if the land tax revenue is sucked up by the central government then there not be much left for local development.

The land and property taxes of Thimphu Thromde cannot be used by national politicians for projects that have nothing to do with Thimphu.

In the case of local governments, the government is planning to not only take away land tax but entirely do away with the CD accounts that local governments use for collecting revenue and then spending it for local expenses.

The land taxes will be controversial and will cause pain, but there will be less complaints if the people see the money being put to good use.

If the money is sucked into a central revenue account which is what the Bill says, then it will most probably go into another pay hike for civil servants or MPs or some other entitlement for them.

This is not an exaggeration as this is what happens to the bulk of the revenue collected in the country.

If a farmer in a remote area sees his or her land tax money being spent like this, then the tax will not get the support of the people and the local governments who are supposed to collect them.

The government should leave the land taxes with the local governments and let them decide how it is to be spent based on local priorities with due accountability and safeguards.

I happen to be one who believes very strongly that state and local governments have their proper roles.
Don Nickles

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