The winter session of Parliament beginning January 15 is expected to be crucial for the government in terms of passing the legislations that it believes would achieve the objective of narrowing the gap.
At the heart of the agenda will be reforms in the tax system and the mining sector on which the government has been doing homework for more than a year now. The proposed legislative changes if passed are expected to set the tone for the government for the remaining three and a half years.
However, the government’s reforms are expected to come under thorough scrutiny of the Opposition. Some Opposition members have hinted that they will draw the government’s attention to major issues like unemployment and the economic slowdown.
The session is being held after a delay of about two months and at the backdrop of a 3.03 percent GDP growth in 2018, which is the second lowest growth recorded in Bhutan’s modern history. The lowest GDP growth was 2.12 percent recorded in 2013.
Observers say the success of the government will largely depend on the achievements of the upcoming session. This is the first session where the government will be tabling major policy changes since assuming office in November 7, 2018.
Members of the ruling parties are upbeat that the Mines and Minerals Bill (MMB) 2020 and reforms in the taxation system will go a long way in narrowing the gap.
The National Assembly’s chairman of the economic and finance committee, Kinley Wangchuk, said that the session will be different from the rest given some crucial bills, especially Tax Revision Bills and Mines and Minerals Bill, in the agenda.
“The DNT government has flagged the ideology ‘narrowing the gap’ and the success of the upcoming session followed by one or two sessions will significantly determine the success of this government,” Kinley Wangchuk said.
He said that tax reforms coupled with passing Mines and Minerals Bill will eventually bring fortune to the government’s coffer should the government levy taxes on goods and services that need to be taxed. “In doing so, we should also carefully consider ease of doing business in Bhutan.”
Drakteng-Langthel MP from Trongsa, Gyem Dorji, said that reforms that the government is expected to bring in the taxation system and the mining sector would address some of the major issues facing the country. He added that the Mines and Minerals Bill and tax reforms Bills are not aimed at taking away the wealth from the rich to the poor.
On the Opposition’s expectations of the session, Deputy Spokesperson of the Opposition, Passang Dorji (PhD), said, “Among others, the session will deliberate important tax-related bills. The kind of deliberations and consequent outcomes will determine the future of our economy, which is already in the red.”
National Assembly members, Passang Dorji said, will have to transcend partisan politics and put their heads together to chart the future of our economy – in which every Bhutanese has a high stake. “The ramifications will be serious and wide should we miss the opportunity to correct some structural and fundamental problems of the economy through appropriate laws.”
“It is high time that the government solidified the clarity of its economic vision and direction. This session will provide us a platform to work as a team to pave a progressive economic path of our country,” he said.
On the poor GDP growth, ruling party MPs said that the two proposed reforms would create conducive environment through policy changes to propel the growth of the economy.
The emphasis on the Mines and Minerals Bill has been so much that the National Assembly is holding the first legislative public hearing on it today. It seeks to replace the Mines and Minerals Management Act of 1995.
Article 1(12) of the Constitution states: “The rights over mineral resources, rivers, lakes and forests shall vest in the State and are the properties of the State, which shall be regulated by law.” But it is said that most of the business is dominated by a handful of people.
As part of its policy to revamp the taxation system in the country, the government will introduce reforms that are expected to increase the PIT slap. But the PIT rates for those earning those earning above Nu 1 million (M) could increase.
The government is also expected to introduce a Sustainable Development Fee (SDF) for regional tourists and table the Tourism Levy Exemption Act 2017, which exempted tariff paying tourists for visiting eastern dzongkhags, for amendment.
The government plans to recoup Nu 10 billion (B) through tax reforms. But critics say the government should be careful not to pinch the private sector too hard and that the the tax reforms should not affect the the sector’s growth.
The government has promised to increase the PIT slab from Nu 200,000 to Nu 300,000 and to exempt BIT for business establishments and firms that have less than Nu 200,000 annual turn over.
It has also promised to do away with the five percent voucher tax. The government’s publication on its first year in office, the Executive states that the voucher tax pledge is expected to come through. But some people are of the view that the voucher tax should be retained and data and call charges reduced.
Observers say that the success of the session depends on the government’s ability to build consensus and homework on the Bills. At least three Bills were withdrawn from the Parliament last session due to lack of homework on the part of the government and relevant committees.
The two-month delay in the commencement of the winter session is supposed to have given more time to come up with well drafted Bills.