The National Assembly’s Economic and Finance Committee (EFC) has recommended tax rise for chicken and pork and its related products, eggs, dairy products and decreased tax for tobacco and related products.
EFC’s chairperson, MP for Gangzur-Minjey, Kinga Penjor, led the Tax Bill of Bhutan 2022 debate at the National Assembly yesterday.
He said the committee recommended the tax revision based on import substitution, a need to conserve hard currency, promote local products, and to improve overall trade balance.
The Committee proposed an increase of 40 percent sales tax on the import of chicken and pork and its related products.
Kinga Penjor said that the country has the opportunity to adequately supply and produce chicken and pork demand in the country.
The members of parliament, however, did not support the Committee’s recommendation and after a raise of hands decided to keep the government’s proposed sales tax of 20 percent.
Agriculture Minister Yeshey Penjor said that the ministry was responsible for the nation’s food security. Lyonpo said that it is important to consider the views of producers and consumers while revising the tax to bring sustainability to the supply chain and to control inflation.
MP of Bartsham-Shongphu, Passang Dorji, questioned the affordability of pork and chicken if the tax is increased.
Finance Minister Namgay Tshering said that Bhutan is able to meet only 50 percent of chicken and 25 percent of pork demands.
Bhutan, he said, imported 4,500 metric tonnes (MT) of pork and 3,000MT of chicken in 2021.
Supporting Lyonpo’s opinion, MP for Bongo-Chapcha, Tshewang Lhamo, said that the increase in the prices of pork and chicken were mainly because of the increase in the feed prices imported from India.
She suggested a government’s subsidy for a feed purchase and establishing feed-manufacturing units in the country.
The Committee also recommended to include milk, butter, cheese, eggs and related products to be considered for the imposition of taxes that the government has not proposed in the Bill.
Milk to increase sales tax from 10 percent to 20 percent and butter, cheese and curd to increase sales tax from 10 percent to 50 percent.
The members, however, did not support the EFC’s proposal to increase tax on milk, butter, cheese, and curd.
Lyonpo Namgay Tshering said that although tetra pack milk is produced in the country at a cheaper price, supply does not meet the demand.
Lyonpo said that Bhutan produced 54,000MT of milk in the country in 2021. However, in the same year, Bhutan imported tetra pack milk of 7,836MT.
Tshewang Lhamo suggested exploring and enhancing the milk processing units in the country with storing capacity and improving shelf life.
The Committee proposed the sales tax on eggs from zero percent to 50. Lyonpo Yeshey Penjor said that Bhutan is self-sufficient in eggs.
The Committee proposed to cut sales tax on tobacco and related products from 100 percent to 50 percent.
Kinga Penjor said that if tax is raised to 50 percent for tobacco products, it would give fertile grounds for black-marketing in the country.
MP for Drametse-Ngatshang, Ugyen Wangdi, said that not only for tobacco and related products the black-marketing is happening for many other items. He proposed 200 percent tax—100 percent sales tax and 100 percent customs duty on tobacco products.
The majority of the members, however, did not support the Committee’s recommendations on tobacco sales tax and kept the government’s proposed sales tax of 100 percent.