Tax reforms

This has been one of the most important Parliamentary sessions in recent times with a slew of important tax bills that will have an important impact for years and even decades.

The most important of them all is the GST Bill given the fact that it is a new tax and will touch almost all goods and services that we consume or deal in. The main challenge will lie in its implementation from next year onwards.

The Finance Minister has taken the extraordinary step of even offering to step down if it is not a success.

The other important bill is the Income Tax Bill that benefits the salaried class, small businesses, large companies, the disabled and those trying to have more children.

There has been some debate on the fixed deposits and dividends, but it appears the MPs have found a middle path that protects small depositors or those who rely on FDs for their income while ensuring that larger FD holders pay tax.

It is not perfect but better than a flat 10% tax on the interest income. The dividend exemption is also welcome as it will encourage people to invest in the stock market which in turn will help the economy.

The Excise Bill will result in a reduction in car costs which is welcome as cars are no longer a luxury in Bhutan anymore, but a necessity. Excessive car taxes do not make sense as it raises the costs for both families and businesses.

At the same time, the higher taxes on alcohol and tobacco are a welcome move along with higher taxes on aerated drinks.

There has been a lot of debate around the effective date of the various Tax Bills in the National Council and while the NC may have a technical point, the past precedents show that this has been done before. If there is a major issue then maybe the law in question can be amended in an emergency session.

However, the since it is a money bill the NA will have the final say on the issue.

The tax bills are not piecemeal reforms but part of a larger whole to change the entire economy and how we do business. It encourages people to invest and become more innovative and also take risks.

“Taxes are paid in the sweat of every man who labors.”
Franklin D. Roosevelt