The Economic and Finance Committee’s recommendation to reduce the Sales Tax on tobacco and tobacco products has been rejected by the National Assembly. The House had its third reading on the Tax Bill of Bhutan 2022 today. The committee had suggested reducing the sales tax on tobacco and tobacco products from 100% to 50%. The committee had argued that this would prevent black marketing and smuggling of the product.
As the National Assembly continued its deliberations on the Tax Bill, the Economic and Finance Committee suggested reducing the Sales Tax on tobacco and tobacco products from 100% to 50%.
“If we can reduce the sales tax on tobacco to 50%, we can prevent the formation of a black market and smuggling of tobacco and tobacco products in the country,” said Kinga Penjor, the Chairperson of the NA Economic and Finance Committee.
However, this did not go very well with the rest of the members as they defended keeping the sales tax as it is. On the contrary, the members suggested increasing the Customs Duty on tobacco from 10% to 100%.
“It is not that smuggling happens only with tobacco and tobacco products. Nowadays we can see cases of vegetable smuggling like the illegal supply of green chillies,” said Dramedtse-Ngatshang MP Ugyen Wangdi. “The current Customs Duty rate on tobacco is 10% and the sales tax is 100%. Keeping sales tax as it is, I would also suggest increasing the customs duty to 100%.”
Jomotsangkha-Martshala MP, Norbu Wangzom, said the committee has recommended increasing sales tax on most of the goods that are essentials and that are not harmful to health. “On the other hand, they are now suggesting decreasing the sales tax on tobacco and other tobacco products. I am a bit worried.”
“As per the committee, the move is to reduce the cases of smuggling but I don’t think it is a good idea to make laws a little flexible just to reduce certain crimes. Tobaccos are not an essential item. People can still survive without it,” said MP Ugyen Dorji, Dewathang-Gomdar.
“Whether we increase the sales tax to 100 or 200%, those who have been consuming it, will find a way and continue consuming it. But of late, what has happened is that with 0% sales tax, many people who have not used tobacco products now also have started to use them,” said Choki Gyeltshen, the Member of Parliament for Maenbi-Tsaenkhar.
At the end of the deliberations, the House through a raise of hands decided to stick to the government’s proposed rate of 100% sales tax. The house will continue its reading on the Tax Bill of Bhutan 2022 tomorrow.
Passang Dorji, BBS
Edited by Yeshi Gyaltshen
