Breaking News! Opposition Leader calls for Finance Minister’s resignation!
Actually, that’s yesterday’s news. That’s when the opposition leader called for the finance minister’s resignation, during the budget discussions in the National Assembly.
But, for some reason or the other, the news has still not reached the media. Bhutan Today, Kuensel, BBS and all the radio stations have been remarkably silent on the opposition leader’s demand.
The media may be uninterested. But you, I’m quite sure, want to know why I proposed such an audacious measure. Here’s the story.
Chapter 5 of the 2010-2011 National Budget is about the tax reforms and incentives that the government recently announced. When introducing it, the finance minister informed the National Assembly that the tax reforms – rationalization of sales tax and customs duty rates, and broadening the tax base – would “strengthen the government’s revenue base”. And that the fiscal incentives would “stimulate private sector growth and attract new investments.”
There’s no doubt that that would be the case. Except that I haven’t yet seen the details. The finance minister’s report was only an overview, and we, members of parliament, were not told which taxes were revised by how much. Like you, I also happen to know the increases in sales tax and customs duty for vehicles. But that’s only because the finance ministry is already implementing it!
The finance minister informed the National Assembly that the tax reforms and fiscal incentives have already been approved by the government. He explained that the government’s authority to approve the tax reforms comes from Part I, Chapter 3, Section 4.2 of the Sales Tax, Customs and Excise Act 2000 which states that:
The fixation of the rates of Sales Tax and any revision thereof … shall be approved by the Royal Government of Bhutan.
And Part II, Chapter 4, Section 6.1:
Customs Tariff and revisions thereof, shall be approved by the Royal Government of Bhutan.
Except that the finance minister ignored the Public Finance Act 2007, Chapter III, Section 9 of which says that:
Raising of revenues through taxes shall be authorized by the Parliament.
And Chapter III, Section 14(b):
The Minister of Finance shall be responsible, inter alia, for: proposing taxation measures to the Parliament …
He also ignored that the government’s authority to approve taxes and customs duties according to the Sales Tax, Customs and Excise Act 2000 were repealed by the Public Finance Act, Chapter I Section 2 which states that the Act shall:
Supersede all laws, regulations, rules and notifications that are inconsistent with the provision of this Act …
But that’s not all. Important provisions of the Constitution were also blatantly overlooked. The government’s “tax reforms and fiscal incentives” should have been submitted to the National Assembly first, as according to Article 13.2:
Money Bills and financial bills shall originate only in the National Assembly …
According to Article 14.1 of the Constitution the Parliament’s approval is required to change the tax structure:
Taxes, fees and other forms of levies shall to be imposed or altered except by law.
And, Article 14.9 of the Constitution reinforces the National Assembly’s authority to approve taxes as government revenue:
Where the budget has not been approved by the National Assembly before the beginning of the fiscal year … Revenues shall be collected … in accordance with the law in force at the end of the preceding year …
Furthermore, the Constitution ensures that the government’s authority to approve taxes and customs duties according to the Sales Tax, Customs and Excise Act 2000 is repealed. Article 1.10:
… the provisions of any law, whether made before or after the coming into force of this Constitution, which are inconsistent with the Constitution, shall be null and void.
Taxes are important. They are the government’s principle means of generating revenue. But taxes are also dangerous. They can be misused to achieve corrupt or political ends. That’s why the laws of the land have checks and balances, and demands transparency whenever the government wishes to impose or revise taxes.
But that wasn’t the case. The finance minister ignored the Constitution and the Public Finance Act. And he bypassed the National Assembly.
That’s why I called for the resignation of the minister of finance.
Photo credit: Business Bhutan
UPDATE ( 30 June, 9:30 PM): I’ve just learned that BBS TV carried this story today.
UPDATE (1 July, 00:24): My apologies to Kuensel. They did run the story.