The government proposal to raise taxes on various items was stripped down to just ‘green tax’ which will be levied only on vehicles.
In a session where NA MPs slammed all the specified sections in the tax bill, finance minister Wangdi Norbu said the tax hike would have never been proposed had it not been for the Indian Rupee (INR) shortfall.
He said, it is the responsibility of the government to take care of fiscal policies by increasing taxes in times of excessive imports and lower taxes when imports are less.
He said the government needs to wait for parliamentary sessions for such fiscal measures to be implemented. “Only a small part is left of what I proposed,” he said.
The amended tax bill was endorsed by NA through secret ballot with 40 members present excluding the speaker. 33 members voted for the bill, four voted against it while three abstained from voting.
The green tax which was proposed to be levied on vehicles, fuels, refrigerators and air conditioners among others has also been amended by the house. The proposed increase by 40% on vehicle tax with engine capacities of 1,800 cc and above has been slashed down to 20% and 5% on vehicles of lower capacity. Green tax on other proposed items including fuel, lubricants and LPG has now been excluded from the bill.
This is in addition to the existing 40- 45 % sales tax and customs duty on the same categories of vehicles, taking the total tax to 65% for vehicles above 1,800 cc and 45% for vehicles below 1,800 cc.
Vehicles above 1,800cc include Toyota Land Cruisers, Honda CRVs and Hyundai brands of Santa Fe and Tucson while Maruti 800, Alto, Hyundai santro xing and the likes come under vehicles of engine capacity below 1,800 cc.
Of the few, Paro MP Chencho Dorji was the first to oppose the green tax proposed in the bill, requesting it to be applicable only to vehicles and to further decrease the percentage on it. He said the projected tax hike on vehicles was beyond public capacity.
He also suggested that the tax proposed on meat, egg and fish was not reasonable or logical. He said, “our poor farmers cannot afford fresh meat for consumption and is mostly dependent on substitutes like dry fish and eggs”.
A tax proposed to be levied on silk fabrics has also been removed from the bill as suggested by several members. Punakha MP Tshering Penjor said the national dress is an important aspect of Bhutanese culture and citizens should be able to afford it. “Textile is already expensive and taxes will make it worse for the poor,” he said.
Excavators, ferry trucks and earthmoving equipments though not included in the proposed bill has been excluded from green tax by the NA along with the proposed utility vehicles such as buses used for general public, pick-ups and trucks used on rural roads.
However, many MPs are alleged to own earthmoving equipments leased out to hydropower projects in the country.
Dagana MP Sonam Jamtsho was one among many who said the proposed tax hike on items such as furniture, fuel, LPG and others except alcohol is an additional burden on the middle income group. He said it is as if, the government is forcing excess load on citizens beyond their capacity.
Bumthang MP Karma Wangchuck said the country’s population divided into less people who can afford a tax hike while a larger section of the nation cannot afford it. However, like almost all the MPs who expressed support in the assembly, he said it was reasonable to levy tax on alcohol and vehicle tax.
Among all the MPs who expressed views on the tax bill in assembly, the NA speaker Jigme Tshultim was the lone member who was against the proposed tax on alcohol. Maximum members encouraged tax hike while some suggested complete ban on alcohol. However, the house concluded that taxes on alcohol shall remain without any change and the proposed hike has been called off.
Trashiyangtse MP Kesang Wangdi who was skeptical of the green tax said levying taxes on vehicles above 1,800 cc will not help in conserving environment and suggested that all types of vehicles be included with a minimum tax.
Gasa MP Damcho Dorji said there is no need for green tax for now as Bhutan’s pollution level is low and is recognized internationally. Fuel and gas, he said are items which are provided to the public on subsidized rates by the government. “It doesn’t make sense if taxes are to be levied on the same subsidized items,” he said.
He said the government seems to be picking on frogs out of fishes aplenty to tax, criticizing the proposal to levy tax on import of power chainsaw. He added that power chainsaw isn’t used by urban people but by farmers and lumberjacks. If it has been deemed harmful for the environment there are laws that protect it, for the chainsaw doesn’t have the ability to cut down trees unless someone uses it to-do so.
Increasing taxes in a move to address the current economic situation he said is a “pathetic” measure.
Speaking on behalf of the government, works and human settlement minister Yeshey Zimba said the government has never levied taxes beyond public’s capacity despite providing much basic facilities in villages.