With the implementation of Goods & Service Tax (GST) in India, imports of goods have generally become cheaper in Bhutan. Consumption is expected to grow which could cause considerable strain on our rupee reserve, especially when considering import of vehicles. Governments use fiscal policy tools to manage the economy and taxes are an important and legitimate tool. Oxford dictionary defines tax as ‘A compulsory contribution to state revenue, levied by the government on workers’ income and business profits, or added to the cost of some goods, services, and transactions. It is not possible to directly link the recent executive decision by the Government in changing tax evaluation as a response growing worries of over consumption without an official statement from the Government, it however, appears to be a control measure nonetheless and one that involves tax alteration. The timing, intent and impact corroborate the suggestion that it is tax alteration. I do not question the merit of the decision. The concern surrounds the non-compliance to legislative process in altering taxes.
This is because during the 1st constitutional case between the Government and the Opposition regarding taxes, the Government had increased taxes and applied it to vehicles without bringing it to the Parliament. The decision was challenged and eventually taken to court. The Supreme Court’s judgment in essence stated that any alteration to taxes must be done through the Parliament. An excerpt from judgment 6.6 of the Supreme Court is presented below:
Under no circumstances the authority to impose or alter taxes may be delegated to the Executive. The alleged authority to impose or alter indirect taxes has no legal basis under the Constitution. Therefore, the imposition or alteration of taxes must comply with the legislative process for making laws at all times as provided under Sections 234 -238 of the National Assembly Act 2008.
Reading from this, the executive decision by the Government in changing tax evaluation from the point of entry to the point of sale, has resulted in an increase in tax. This is the first time since 2008 that such a change in evaluation has happened and vehicles have been the focus of the decision. Similar change in tax evaluation happened only before 2008; beer was one such product. Even as we try and comprehend what has happened, the recently announced policy decision has received another tinkering and green taxes have once again been reverted back to point of entry evaluation. The optical may show suggest something else but applicable taxes have increased and hence, altered.
Recognizing that managing the economy is one of the many responsibilities of the Government, upholding the rule of law is an equally compelling duty. These serious concerns of violating the principle of non-delegation of legislation enshrined in the Constitution and circumventing legislative process in altering taxes against a clearly articulated judgment of the Supreme Court is a cause for worry. It requires deeper reflection and appropriate action on the part of both the Government and the Parliament.