NC Good Governance Committee questions the government’s proposal on the deferral of GST

During the deliberation on the Goods and Services Tax (GST) Amendment Bill of Bhutan 2021 on 10 June, the Chairperson of the Good Governance Committee (GGC) of the National Council (NC), Sangay Dorji, said although the principle and rationale of the GST Bill of Bhutan 2021 is to mend the taxation system in the country, however, GGC has its reservations on the Bill.

The committee recapitulated the recommendations of the 24th Session of the NC, and shared the similar concerns and suggestions on the legality of the commencement date, preparation on the government for immediate implementation and the importance on clear differences between a Money Bill and Financial Bill.

The deferment of the commencement date of GST Bill of Bhutan 2021 to next year was questioned by the NC members, and it was pointed out that a few sections in the Bill were already implemented, while the government has proposed for a deferment.

The GST Bill was introduced during the 25th Session of NC, and there were three concerns on the Bill discussed. Despite the NC deliberation on the concerns, when it comes to the Money Bill from NA, the recommendations, suggestions and concerns need not have to be taken seriously by the NA, said the GGC Chairperson.

 He further added that now that it has come as an Amendment Bill for 2021, again, the committee holds the same concerns.

 The first concern that the committee has shown to the NA on GST amendment bill 2021 is on the legality of the commencement date.

“In my own experience, in all the Bills that have been passed or adopted, I have never seen two commencement dates, but GST Bill has two commencement dates, for few sections of the Bill they are going to implement it the moment the Bill is being adopted, and the part of the four chapters they are going to amend or commence the implementation after one year or so,” the GGC Chairperson said.

He said when it was adopted last year, the first four chapters were to be amended the moment the Bill was adopted, and the commencement date was set for July 2021.

“But now, because of certain issues in the preparation, and challenges that the government has faced in the installation of the system, from getting the expertise from outside and the COVID situation they are saying that we need to amend it and the amendment dates of four chapter is to be taken to 1st July 2022, which is too far for us, which is why we said as per the Public Finance Act section 46B, it says that any Bill, especially Money Bill, the implementation has to be started from the day it is tabled in the Parliament,” said GGC Chairperson.

Since the preparation is still going on, he said, that the committee is not sure whether preparations can be done again, as decided by the government because the situation is getting worse due to the pandemic.

“If we cannot abide by the Public Finance Act section 46(B) then as a Parliament, having the authority of enacting of amending the Bill, it is not wise on to take such a blind decision,” the GCC Chairperson said.

The second reservation shared was preparedness of the government for the immediate implementation, since the work is still ongoing with an investment of more than Nu 600 million for the project given to the local IT experts in the Thimphu Tech Park (TTP).

TTP is getting support from Armenia which is subject to frequent lockdowns and no international movement, and impeding the work.

He questioned, “In this regard we are saying that even after passing the Bill or agreeing on to what NA has submitted in the amendment, if we are not able to implement it then what is the use of passing the Money Bill?”

As the Finance Minister has requested for the deferment, the committee said that the concern is that even at the end of July 2022, if the things are not in place, then there is no use of approving the Bill right now. So in that regard GGC has proposed to NC to give the government enough preparatory time.

The third concern shared was on the need to draw a clear distinction between the Money Bill and Financial Bill. As per the Public Finance Act 46A Act of 2012 treats Financial Bills as synonymous with the Money Bill where as Article 13(5) of the Constitution states that only Budget and Urgent Bills shall be in the same session of the Parliament.

GGC said that the Public Finance Amendment Act 2012 is inconsistent with the Constitution. GGC stressed on the need of an urgent amendment of the Public Finance Amendment Act 2012 to address the existing inconsistencies with the constitutional provision. 

“We cannot approve this Bill because there is the issue of legality. When we approve or enact one Act, we are violating another Act, which is not in our mandate. As a House of Review, not only taking the legislative role as a House of Review, it is our mandate, and putting our soul into the role and these are certain things that we need to strictly look into,” said the GGC Chairperson.

During the deliberation in NC on 10 July, members shared their concerns, some supporting the proposal proposed by the committee and some shared different ideas. GGC will hold a separate house meeting with the members who have shared their concerns and present its recommendations to the National Assembly in the next sitting.

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