The members of the National Council deliberated on the people’s concerns surrounding the Property Tax of Bhutan 2022 during the question and answer session today. The members stated that the property tax has led to a substantial hike in land tax rates following the adoption of the government’s PAVA rate. According to the finance minister, although there are no plans to review the Property Tax Act, the ministry will take a relook at the PAVA rates and correct lapses if any to improve the new property tax system.
The Property Tax Act of Bhutan 2022 provides several concessions such as cultivated dry land being given a 50 per cent concession, a 90 per cent concession for wetlands, a 50 per cent concession for self-occupied traditional houses, a 70 per cent concession on traditional houses in protected areas, and a 90 per cent concession for highland communities.
Bumthang Member of the National Council, Kencho Tshering raised concerns from the public regarding land classification categories that do not fairly serve land owners, taxes levied on temporary houses such as kitchen and cattle sheds due to the radius method of GPS satellite, and the 100 per cent taxation on uncultivated land, which is often under forest cover, cliffs, or isolated without road connection among others.
“Whenever we visit our constituency and ask people about the issues they are facing, they always tell us that their biggest struggle is the substantial increase in property tax. Therefore, does the government and the Finance Ministry have any plans to review and amend the Property Tax Act?”
In response, Finance Minister, Leki Dorji said the government will examine the entire property tax system and make necessary changes and improvements.
“It has been almost a year since the Property Tax Act of Bhutan 2022 was implemented. We acknowledge that there are lapses in terms of PAVA rates on green zones, red zones, and buffer zones. For example, construction and working on land near Trashichhoedzong are not allowed, but taxation rates are high. Therefore, we need to review such lapses.”
He further added that the taxation difference between cultivated and uncultivated land is meant to encourage the productive use of land for agricultural purposes in the country.
The finance minister also highlighted the importance of taxes in a democratic country for the country’s sustainability in the long run.
“We have collected about Nu 650 M through the current property tax in a year. However, for just one month’s salary, we spent over Nu 2,400 M to pay civil and public servants and the local government. Therefore, considering our country’s sustainability, the parliamentarians must create awareness about the importance of taxation.”
The Nu 650 M collected in property taxes so far this year is an increase of over Nu 555 M compared to the collection made under the old property tax rates last year.
Kinzang Lhadon
Edited by Yeshi Gyaltshen
