The Bhutanese Leading the way.
Govt says change is overdue and it can make up for revenue loss
The Finance Minister Lyonpo Namgay Dorji said that that the government’s Personal Income Tax reforms will cost the government Nu 484 mn a year.
It will also mean that 31,692 people earning less than Nu 200,000 a year but more than Nu 100,000 a year will also become PIT tax free. If the 14,413 who are already tax exempt with income below 100,000 is included then the total number of people now PIT tax exempt will be 46,105.
The Finance Minister said that the Nu 100,000 exemption had been last set in 2001 and after 15 years it was high time to increase the slab to Nu 200,000 as going by inflation the Nu 100,000 then is now worth more than double of that.
He said that internationally it is the norm to revise PIT slabs every two years and giving some regional examples he pointed out that Bhutan had the lowest exemption slab in the region compared to Sri Lanka with 500,000, Pakistan with 400,000 and India, Bangladesh and Nepal with 250,000 each.
The Finance Minister said that given the inflation the move was to help the lower income category.
The PM said that the Nu 50,000 education deduction was also not enough for parents educating their children and so that is why it had been increased to Nu 150,000.
He said that the government can afford the hike since the government will earn Nu 129 mn by revising the mining mineral Royalty which leaves a difference of Nu 355 mn. Here the PM said that Bhutan Lottery, Dagachu etc would also help in earning revenue.
The PM said that the internal revenue target for 2013, 2014 and 2015 had been around Nu 42 bn but this had been exceeded with Nu around Nu 44 bn in actual revenue being collected. He said that at the same time the government had also reduced non hydro loans from Nu 40 bn to Nu 34 bn which is a reduction of around Nu 6 bn.
He said that the government had taken a careful and close look at its accounts and concluded that not only could it afford the PIT reforms but it was also high time.
The Finance Minister said that the government by the end of the 11th five year plan would achieve its target of keeping the fiscal deficit below 3 percent.
Lyonchhen pointed out that to prevent excessive borrowing and maintain fiscal responsibility the cabinet had also recently approved a Public Debt policy.
