The Private Sector Task Force for COVID-19 has proposed the reduction of taxes as one way to help spur new investments and growth and potentially get in new FDI.
The idea behind reduction in taxes is that the government anyhow would not get any revenue if there is no income generation no matter what the tax rate and so the proposed effort is to enlarge the pie by reducing taxes and getting more investments.
The CIT for corporations is already reduced to 25 percent while BIT is 30 percent and PIT at the higher scale is 30 percent.
However, the Prime Minister Dr Lotay Tshering said he is not favour of tax reduction, but the private sector can be assured that the government will not raise taxes to make up for revenue loss.
“Companies and people pay taxes when they make a profit but right now the whole GDP growth is negative. Why do we have to worry about taxes now and why should we reduce companies who are making a profit,” asked the PM.
He said that anyhow companies that are not making a profit will not pay the taxes as they just have to file and declare that they have gone into a loss.
“I personally feel that companies that are making a profit must pay so I really don’t understand why there should be a bargain on taxation,” said the PM.
“But this is definitely not the time to increase taxation by thinking that the government needs revenue. That is conventionally done but not in these times,” added the PM.
He said if those who are supposed to pay taxes are bargaining to reduce taxes then that means that they are making a profit. “I would like to have them paid,” said the PM.
He said in terms of PIT the most constant PIT paying group are the public servants and for them the income is fixed and the PIT is fixed. “I wouldn’t like to disturb that,” he said,
The PM said there are some businesses that have picked up a little during the COVID-19 and it is their luck and he is sure there is a willingness to pay BIT for a little extra that they made.
He said that CIT and BIT reduction has not come to him before as he is hearing about it for the first time but to him it does not make sense.
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