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After some procedural hiccups, the National Assembly yesterday passed the Fiscal Incentives 2016 as a money bill although it was initially introduced as a report.

Thirty-one of the 42 MPs present in the House voted ‘Yes’ for the bill, 10 voted ‘No’ and one abstained. The bill will be forwarded to the National Council and passed during the ongoing session by both Houses of Parliament.

The fiscal incentives will be effective from May 8, 2017, the date the bill was introduced in the House. However, the most difficult question remains: what will happen to the tax incentives the private sector has already received prior to May 8, 2017?

The fiscal incentives granted by the former government in 2010 and 2013 amounted to about Nu 7 billion. The incentives expired on December 31, 2015, but the present government gave continuity to the same incentives from January 1, 2016.

Neither the present, nor the former government sought Parliament’s approval.

As the House could not find an answer to the question, Speaker Jigme Zangpo said that the House would seek the Supreme Court’s direction to resolve the issue.

“This (the manner in which the fiscal incentives have been endorsed by the House) will be precedence for future governments. But we will seek the Supreme Court’s directive about this fiscal incentives bill and the ones that are already implemented,” the Speaker said.

Opposition MP Karma Rangdol said that although the House had agreed to pass the fiscal incentives as a money bill, concerns over the ones that have already been implemented should be addressed.

“Simply accepting the mistake and saying the government will not violate the law in future is not enough. People may think that laws have been violated,” he said, adding that it was important for the government to clarify its position on the issue.

Chumey-Ura MP Tshewang Jurmi, who seconded the finance minister’s motion to pass the bill, said that although the Cabinet endorsed fiscal incentives, the House had accepted that it had to be endorsed as a money bill. “We now know it was not in accordance with the law,” he said, adding that Parliament’s approval will be sought to pass fiscal incentives in future.

However, cabinet members indicated that they were not convinced that fiscal incentives must be passed by Parliament.

Foreign Minister Damcho Dorji said various laws empower government to grant fiscal incentives without Parliament’s approval. “Although we believed that it’s the government’s prerogative to grant fiscal incentives, the government respected the Speaker’s decision to treat it as a money bill,” he said.

He cited Chapter 2, Section 3(2) of the Sales Tax, Customs and Excise Act 2000, which states, “On the satisfaction and in public interest, the Ministry of Finance may exempt a person from the payment of Bhutan Sales Tax.” Chapter 3 Section 5(2) of the Act states: “On the satisfaction and in the public interest, the ministry may exempt a person from the payment of customs duty.”

The Act, the foreign minister said, was amended in 2012 following the Supreme Court verdict in the first constitutional case between the government and the opposition. “However, these provisions were retained and are still applicable,” he said.

The foreign minister also cited Part II, Chapter 3, Section 9 of the Income Tax Act 2001, which states that on satisfaction and in the public interest, the ministry may grant exemption and tax holidays to certain businesses. The foreign minister added that since the Supreme Court was the authority to interpret the law, the issue should be submitted to the apex court.

Opposition Leader (Dr) Pema Gyamtsho said that the debate about whether fiscal incentives are money bills was between the Cabinet and the Assembly and not between the ruling party and the Opposition. “The government still does not agree that it is a money bill,” he said.

Citing a news report, MP Dorji Wangdi said the Prime Minister still did not agree that the fiscal incentives could be money bill. “More than anyone, the prime minister and the foreign minister should be knowing about the legal provisions relating to a money bill,” he said, adding that they were the ones who sued the former government over the same issue.

He also said that since it was introduced as a bill, the House should read and deliberate all chapters and sections of the bill. The House, however, passed the fiscal incentives without deliberations on the bill’s contents.

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