Taxing explanation

The prime minister devoted a substantial part of his State of the Nation address to justify the government’s recent tax hikes. And to discredit the “vocal few” who challenged the government’s ill-conceived tax policies. The prime minister:

Much has been said of the fiscal incentives and tax increases in certain areas. It has been alleged that the government is being insensitive to the difficulties that these will cause to our poor and ordinary businesspeople and that they will suffer the most. However, one should not allow oneself to be influenced without seeing the full picture. One needs to be also mindful that such opinions could be planted to influence public opinion in order to protect the interest of those who are in positions of power and influence. As this is a serious matter, I would like to explain it in some detail.

And so he explained, in great detail, that we enjoy some of the lowest tax rates in the world; that we must replace external development assistance with internal revenue; that the policies are pro-poor; that the tax hikes are not aimed at generating government revenue; that taxes were being increased for the public good in spite of the political risks; that doing what is popular would be unpatriotic; that the opposition to tax increases benefits the rich and influential; that ministers did not take a pay raise; that increasing taxes will prevent widening economic disparities and social ills; that taxes lead to environment friendly development; that the tax measures would develop a tax paying culture; and, finally, that paying taxes is about democracy.

Indeed, we may need to increase taxes. So taxes, per se, is not what I’m concerned about. Not at this time, at least.

What I am concerned about – and what the public outcry is generally about – is that the government did not follow the law, particularly the Constitution, when it recently revised the tax structure.

The debate is not about if taxes should be revised. It’s about how taxes should be revised.

In order to deflect the debate, the prime minister used the State of the Nation address to explain, at great length, why taxes had to be increased.

But that won’t do. I’ve already reported the matter in the National Assembly. And if the government refuses to review its decision, I may be compelled to report it to the Supreme Court.

 

Facebook Comments:

Comments

  1. We cannot simply compare our countries to other countries when it comes to tax. There are only a handful of countries in the world, where more than 80% of the population are involved in subsistance farming.

    The main point we are arguring is not really baout the tax itself. It is unfairness of it, it is the way it was done. Just like the CDG, and Gup’s benefit increases , they did not discuss those in the National Assembly. They simply passed it for the sake of it.

    Why even have national assembly, if we don’t use them to pass important laws. This is a dangerous precendent. This basically means the next party to win the election and do whatever they like without discussing it in the national assembly.

  2. the focus should not only be on HOW the taxes were increased but also on WHY and WHETHER it will really help the country.

    while the tax hike will generate only an additional revenue of Nu 450 million, nobody has focussed on intangible burden it will pose to our poor people.

    over the past seven years, the salary of the civil service has increased twice and there is talks for a third round. but has the income of our farmers seen a proportionate increase?

    i think the govt shoudl try to convince the people by doing baseline studies of the impacts of such deicsion rather than by resortign to a shortcut of some desk calculations. the DPT govt shoudl also stop camouflaging all its decisions under the GNH cover. all govt decisions cannot promote GNH. some decisions need tobe taken for pure economic reasons and the govt shoudl tell the people thus.

    at a time when the citizenry is getting more critical by the day, the DPT should wake up to face the realities.

  3. Wise Old Man says:

    So we are heading towards becoming a TAX NATION and the way we are going it looks like opposite of becoming a GNH nation. So what if we are a hydro power nation.It looks like it will and is benefiting the already a “cream crowd”. Poor us, we will remain the same.By saying this i am not at all expecting the govt to come and distribute money to its people.But maybe look at simple things like cut on interest rate, lower PIT RATE, lower or even wave off water and sewarage charge.Instead of that the govt looks ate revising power tariff. I think we will be a “POWER NATION” but only for India.We ill have to resort to darkness.What a joke.But hey it does not matter.The “lawmakers” dont have to pay for this kind os services any way.WAY TO GO!! WAY TO GO!! We are living the Bhutan dream

  4. Wise Old Man says:

    So we are heading towards becoming a TAX NATION and the way we are going it looks like opposite of becoming a GNH nation. So what if we are a hydro power nation.It looks like it will and is benefiting the already a “cream crowd”. Poor us, we will remain the same.By saying this i am not at all expecting the govt to come and distribute money to its people.But maybe look at simple things like cut on interest rate, lower PIT RATE, lower or even wave off water and sewarage charge.Instead of that the govt looks at revising power tariff. I think we will be a “POWER NATION” but only for India.We will have to resort to darkness.What a joke.But hey it does not matter.The “lawmakers” dont have to pay for this kind of services any way.WAY TO GO!! WAY TO GO!! We are living the Bhutan dream

  5. dear tt, undettered by the political implication of doing so, it is best for our Government to increase the unit price of exportable hydro power and generate revenues as opposed to taxing already over-burdened citizens or institutions of our nation. This is relatively a more sustainable strategy vis-a-vis taxation. I don’t know how strained top-line of our companies will produce sufficient bottom-lines to be able to contribute to the coffers of the government exchequer.

  6. Thinlay says:

    People who do not want to be taxed should not demand anything from the government. We should accept the fact that there is nothing called “free meal”. Everything has a cost and sooner it is realized better it is for the future of the country. I am sure none of us want Bhutan to go begging from outside for our living beyond our means. Simplify our living mode, then we will be contended.

    Cheers

  7. Thinlay, what good is taxing going to do, if all the money are being used to gain political advantage, and subsidize the already rich people.
    It is like stealing from the poor and giving it to the rich. Opposite of Robinhood.

  8. Dorji Tshering P says:

    OL we are with you. Since Ap Naka (PM) insists of going ahead with his illegal tax plans you must take it up with the Supreme Court. We will support you in this process.

  9. Lhendup says:

    Economics have taught us that the increase in price lowers the demand for the commodity of the increased price. The PM, I think have ruled out the fact that there are exceptions to the Law of demand. Junk food is one exception. Practically in our situation, I dont think the demand law applies. There haven’t a study done to support this. I think Health is just a declaration, but beyond this as junk foods are mass consumed, It would do more harm by raising the price as the demand may not go down and the purchasing power may be lost

  10. OL,please save us,the junior citizens from suffering the burden of tax,you are our backbone to avail the opportunity of importing cars at a lower tax like wangdi norbu and other DPT CANDIDATES(all have enough cars even for their grand sons and daughter) have imported in ADVANCE.WHY? Because they informed public only before 12 hours.
    lynpo,u r the only one who can oppose JYT,please help us,u will be rewarded and recognised one day or later……………………we promise
    hope the judges are not afraid of PM,dot worry judges,it will never hamper ur promotion and PM will not denny shaking hand with u in any ocassions.

Leave a Reply