Politics: The opposition party has demanded that the government revise the upper tax slab for those earning more than Nu 1 million a year, in the next Parliament session.
The opposition expressed their disappointment and said that there is a conflict of interest in not revising the personal income tax rate for the higher income groups as the Cabinet ministers also fall in the group.
During the 7th session of the second Parliament, the opposition and the National Council proposed that tax for the upper income group be revised to 30 percent.
“We proposed for upward revision of the tax rate from 25 percent to 30 percent,” Ugyen Wangdi said.
The tax rate was not revised for the past 15 years, instead opposition party members said that the rate was lowered sometime before the advent of democracy.
A progressive tax rate is ideal for countries like Bhutan with low domestic revenue, he said. “Individuals earning a million or Nu 10 million are paying the same tax,” he said.
The party said that the individuals earning millions of Ngultrums in income have a sense of pride in paying tax and contribute to nation building.
“The raising of the tax rate would reduce the income inequalities between the rich and the poor,” Ugyen Wangdi said.
However, the government and members of the ruling party did not support the proposal in the recent deliberation on personal income tax revision.
The Prime Minister had pointed out that he and the Cabinet ministers would not fall in this bracket.
Contrary to his claim, the opposition said that they would fall within the bracket of the proposed 30 percent.
“We feel the proposal was rejected purely on the ground of conflict of interest and to evade higher tax rate for the Prime Minister and his Cabinet,” Ugyen Wangdi said.
A cabinet minister earns a monthly salary of at least Nu 130,000 and the Prime Minister’s salary is about Nu 180,000.
“The government had deliberately maintained the upper limit of 25 percent on tax rate as it suits their interests,” Ugyen Wangdi said.
He added that the government had no hesitation in revising the five percent sales tax on mobile recharge in 2014 despite repeated objections.
“The government then justified that our people have the ability to pay five percent tax mobile recharges because they spend more than the tax amount on doma,” Ugyen Wangdi said.
The opposition party said that the mobile recharge sales tax has affected the lower income group the most.
Non-revision of the upper tax slab and the imposition of the sales tax on mobile recharges will further widen the gap between the rich and poor in the country, the opposition leader, (Dr) Pema Gyamtsho said..
The government should promote a tax paying culture, (Dr) Pema Gyamtsho said. “Even if the amount is small, when combined, it could help bring about development in the country,” he added.