Tax: The opposition’s claims on the government refusing to introduce the new tax slab of 30 percent for the upper income group stating that ministers fall within this bracket, is an act of undermining the government by misrepresentation of truth, the Prime Minister said.

During the last session of Parliament, the basic exemption limit of the Personal Income Tax (PIT) was revised from Nu 100,000 to Nu 200,000. However, if the net taxable income exceeds Nu 200,000 but does not exceed Nu 250,000, a tax of 10 percent is levied on the amount by which the net taxable income exceeds Nu 200,000. Similarly, for net taxable income between Nu 250,000 and 500,000, the tax rate is Nu 5,000 plus 15 percent of the amount by which taxable income exceeds Nu 250,000. For net taxable income between Nu 50,000 and Nu 1 million (M), a tax of Nu 42,500 plus 20 percent rate is being levied and for income exceeding Nu 1M, the tax is Nu 142,500 plus 25 percent in a similar manner.

Getting into the math, Lyonchoen revealed that ministers do not fall into the 30 percent slab even if it was introduced for individuals with an annual income exceeding Nu 2M.

Even the National Council has recommended introducing a new slab of 30 percent for annual income exceeding Nu 2M and 25 percent be retained for income between Nu 1M to Nu 2M, keeping the rest as proposed.

Lyonchoen said the basic salary of the Cabinet ministers is Nu 1.606M a year and a leave encashment of Nu 135,200 is also entitled for each minister. House rent allowance, if monetised, he said comes to Nu 245,803. The ministers are also entitled to other allowances for telephone and internet use amounting to Nu 79,298. The gross annual salary of a minister comes to Nu 2.06M. Deducting for provident fund and group insurance schemes of Nu 176,748, net salary income comes to 1.89M a year. “So the 30 percent slab for Nu 2M doesn’t apply to us,” he said. “We’ll pay the same tax even if the new slab is introduced, so where is the conflict of interest.”

Giving a detailed deduction of tax in each slabs, Lyonchoen said the net tax payable for each minister is Nu 365,088, if no other deductions are applied. However, he pointed out that deduction of education expenses of Nu 150,000 per child is allowed and that ministers contribute 10 percent of their pay to the party that is also tax deducted.

However, Lyonchoen agreed that the annual income for the prime minister would fall in the 30 percent bracket. “But I do not take single chetrum above what ministers are earning,” he said, adding that he willingly donates the surplus to charity. This amounts to Nu 560,000 a year. “So, this doesn’t affect me either,” he said.

He, however said that for the opposition to attack the government by spreading misinformation is a cause for concern. “This undermines their own credibility,” he said.

“I refuse to believe that the opposition did not know the numbers because there are two previous finance ministers, shadow finance minister participating in discussion,” he said.  “They know the numbers but chose to misrepresent the truth and attempt to undermine the government,” Lyonchoen added.

The opposition, meanwhile issued a press release last month stating that the tax revision would lead to a widening gap between rich and poor as individuals who are earning an income of Nu 1M and 10M are paying the same tax rate for past 15 years.

“The government had deliberately maintained the upper limit of 25 percent as status quo as it suits their interests,” the press release stated.

The opposition party has also demanded the government to introduce the revision of the upper tax slab in the 8th Session of the 2nd Parliament.

Tshering Dorji