The Economic and Finance Committee of the National Assembly proposed increasing Bhutan Sales Tax for imported items. Doing so, the Committee said, will improve the country’s balance of trade which means it will reduce imports. Balance of trade is the difference in value between a country’s imports and exports of goods and services.
Currently, most imported goods are imposed sales tax ranging from zero to up to 100 per cent. According to the Committee’s observation, today, there is a levy of five per cent Bhutan Sales Tax on cement from both India and Bhutan. However, despite this, the price of local cement is higher due to the high cost of production in the country.
“Today when Bhutan imports cement from India, they waive 29 per cent tax and make it to zero. And when it reaches Bhutan, it is levied 5 per cent BST. If the base cost is very low already, no matter five per cent or how much ever tax we impose on the imported cement because our cost of production is expensive, our Bhutanese cement cannot compete with theirs,” said Kinga Penjor, Chairperson of the Committee.
Supporting the committee’s recommendation, the opposition leader said there is a need to reform taxation policy in the country as and when it is required.
“Globally and regionally, in neighbouring countries, when their taxation policy and rules change, our country not being able to change ours from time to time is perhaps one of the reasons why there is an imbalance of trade,” said Dorji Wangdi, Opposition Leader.
The country exported goods worth more than Nu 52bn last year while the import was more than Nu 90bn.
With the majority show of hands, the house supported the committee’s recommendation. The deliberation on the rest of the issues and recommendations will continue next week.
Samten Dolkar
