NC concerned about non-adherence to Public Finance Act 2012

MB Subba

Some of the money Bills that are being deliberated in the ongoing session of the Parliament is in a quandary as their effective dates are not in conformity with the Public Finance Act 2012.

The National Assembly has passed and forwarded the money Bills to the National Council (NC). However, the effective dates of some of the Bills have been deferred despite Section 46B of the Act prescribing that such Bills shall be applied retroactively from the date it was initially tabled in the National Assembly.

The issue was highlighted in the NC yesterday during the discussion on the Pay Revision (amendment) Bill. Members expressed concerns about the disregard to the Public Finance Act.

The Pay Revision (amendment) Bill states that it would be applied retrospectively from July 1, 2019. In contrast, the Goods and Services Tax Bill (GST), which is also a money Bill, states that it would be effective from July 1, 2021.

Both the Bills are scheduled to be discussed and adopted today. The Bills will be sent back to the National Assembly.  

Eminent member Karma Tshering stressed on the need to abide by Section 46B of the Public Finance Act. But he added that such discrepancies in application of the law should be accepted as a “one-time exceptional case” and that such situations should be avoided in the future.

Member from Bumthang, Nima, expressed his concern on the discrepancy in the effective dates of the Bills, saying that the effective dates have been prescribed depending on convenience.

“Some times we insist that a money Bill should be implemented as per the Public Finance Act.     

Other times we say that a money Bill can be implemented at a later date,” he said.

Gasa’s member Dorji Khandu said that Public Finance Act was not respected. Referring to the proposal to implement the GST next year, he said, “It would be like committing a crime today and promising not do the same in the future.”

However, practical difficulties to abide by the Public Finance Act have been pointed out.

Finance Minister Namgay Tshering while presenting the GST Bill in the NC last week acknowledged that the proposed effective date of GST was not in conformity with the Public Finance Act. But he added that it was not possible for the government to implement all money Bills as prescribed in the Act.

Citing an example, he said that it would be difficult for the government to refund 5 percent voucher tax to mobile users if the parliament’s decision to do away with the voucher tax were to be implemented retrospectively.

Similarly, if the Tourism Levy and Exemption Bill were to be implemented retrospectively, it would be near impossible to collect Nu 1,200 per regional tourist that would have visited Bhutan and left.

The Public Finance Act also states that a Money Bill shall be passed in the same session. But NC members suggested that the Act could be amended if need be.

Questions also have been raised on whether a Bill like GST that requires lengthy discussion should be rushed through the same session. A National Assembly MP said that GST Bill could have been introduced as a non-money Bill, arguing that GST was only about the principle and design of taxes.

According to the Constitution, only the budget and urgent Bills must be rushed through the same session. This, according to some observers, means that some money Bills could be passed as normal Bills depending on the urgency and the nature of the Bill.

The government keeps a money Bill secret until it is presented in the National Assembly to prevent issues like hoarding.

It is in view of such issues, the Public Finance Act states that a money Bill is applied retrospectively from the day it is introduced by the finance minister. But deferring the effective date of a Money Bill renders the intent of the Act meaningless.

The government argues that it was a matter of interpretation of the Act. But the need to apply a money Bill retrospectively has been mentioned clearly in the Act.

The finance minister earlier in NC said that not all money Bills were implemented as per the Public Finance Act even by the past governments.

The Supreme Court judgment in the first constitutional case between the first government and the opposition passed in 2011 also confirmed that “a Bill relating to imposition or increase of tax must be deemed to come into force immediately on the day the Bill is introduced”.

The deferring of the effective date could also come in conflict with the Constitution, which states that a Bill passed by Parliament shall come into force upon Assent of the Druk Gyalpo. A Bill should be presented to the Druk Gyalpo within 15 days from the date of passing.