Phub Dem | Paro
Responding to Bardo-Trong’s MP Gyambo Tshering regarding strategies and plans to address the deficit, Finance Minister Namgay Tshering said that the concern should be on fiscal surplus rather than a deficit.
The current fiscal year has recorded a deficit worth Nu 15.34B.
So far, the government has utilised only six per cent (Nu 2.5B) of the total capital budget for the year.
The government allotted a capital budget of Nu 37B for the fiscal year.
With only six months left for the new financial year, Lyonpo said that utilising the allotted budget was a concern. “The concern is about fiscal surplus and its impact on developmental activities.”
He said that if the activities were carried out as per the plan, it would have addressed unemployment issues and stabilised the economy.
Fiscal deficit, according to Lyonpo, was inevitable in the growing economy.
Lyonpo said the government resorted to an external borrowing of Nu 420M and domestic borrowing of Nu 13.5B to address the deficit.
However, without economic activities on hold due to the pandemic, he said that the government borrowed Nu 6B through the issuance of T-Bills and government bonds and Nu 8B from multilateral development banks.
With the pandemic hitting hard on small retail businesses in the country, Athang-Thedtsho MP Kinley Wangchuk raised the business owners’ appeal to waive income tax for this year.
Lyonpo Namgay Tshering said that there were more than 23,000 registered small and micro-businesses in the country, of which 12,400 were in rural areas. He said that the Fiscal Incentive (amendment) Act of Bhutan 2020 deferred the expiry year of the income tax exemption to small and micro-businesses in rural areas from December 31, 2023, to December 31, 2024.
Others, he said, did not have to pay the tax if there was no profit while filing the tax.
The government had forgone tax exemption worth Nu 32 million (M) to small and micro-businesses in rural areas last year.
Amid the pandemic, Lyonpo said that the government deferred the payment of Company Income Tax (CIT) and Business Income Tax (BIT) until December for tourism and related sectors as per the Comprehensive National Response to the Challenge of the Covid-19 Pandemic Phase II.
“The tax payment of other sectors has been extended until October,” he said.