The government pledged in its party manifesto that it will recover Nu 10 billion by streamlining and strengthening tax collection if it comes to power
The government will implement the Goods and Services Tax (GST) by mid -2020 in the country to recoup Nu 10bn as it had pledged in their party’s manifesto.
This was divulged during the Meet-The-Press session yesterday.
Finance Minister Namgay Tshering said, “If we look at the revenue and taxation policy and system that are in place, it has been very erratic and at the same time we also have a very complex tax exemption system in place.”
“Most importantly tax base is very narrow. Taking that into consideration and cognizant that the tax base is very narrow, we have taken up the initiative to peruse with the go ahead of the implementation of GST,” the finance minister said.
As the key and features of GST is broad based tax system or basically broadening the tax based system, the minister said this would also avoid tax on tax payment, which will be burden for the consumers.
“GST will ensure that everyone is complying to tax payment culture and leakage in the tax payment system is very minimal,” he added.
It was also divulged that the Ministry of Finance is in the process of drafting legislation to present it to the cabinet and parliament.
“This is basically to streamline the system and this will create an avenue as such it will be creating environment that both the tax payers and government will have win-win factors. The tax payers will also not feel that there is additional burden on them and at the same time there will also be additional revenue for the government exchequer,” Lyonpo Namgay Tshering reasoned.
“GST project is coming in a big way. It will be implemented by mid of 2020. Whatever the changes in the fiscal policy that the government wants to bring, the government wants to take time and wants to ensure that this system will sustain” he added.
Prime Minister Dr Lotay Tshering also added that the government will review the taxation policy strictly.
Lyonchhen said after reviewing that taxation policy everyone will be paying a few thousands more in taxes and those who are already paying will have to pay a little more.
‘The benefits will come to everyone’s table with better services like drinking water and good connection of roads in the rural areas,” Lyonchhen said.
As the conventional sales tax is 2.5% of the Goss Domestic Product, it was also said that it will contribute 5% of the GDP after the implementation of GST.
The Finance Minister added that those people who are consuming higher commodities will be paying higher tax and those people who consume less commodities will be paying less tax with the introduction of GST in the country.
Meanwhile, the government had pledged in its party manifesto to build a stronger and more transparent tax system.
They pledged that they will recover Nu 10 billion by streamlining and strengthening tax collection. It stated that income and taxes will be monitored by developing linkages between -financial sectors and services to enable more transparent information sharing and ensure everyone pays their fair share.
It also pledged to strengthen the revenue and customs department to monitor and act on tax evaders and institute penalties that deter such practices.
“We will review prevailing taxes and tax bands to ensure the wealthiest Bhutanese do not pay less than hard working middle class to bridge the gap and sustain the economy. We will consider instituting progressive taxes and benefi¬t systems as part of our strategy to narrow the gap. We will adopt appropriate tax policies and consider instituting luxury and inheritance taxes,” states the party manifesto.
The party also pledged to exempt low and middle income families from paying Personal Income Tax up to Nu 300,000 and exempt BIT for business establishments and firms that have less than Nu 200,000 annual turnover.
Dechen Dolkar from Thimphu