Tax exemption on books unconstitutional: opposition

Although the intention is good, the government is urged to abide by the laws in place 

Duty: While the intention is appreciated, the government’s decision to exempt the payment of customs duty and sales tax on all books imported this year, according to the opposition violates Article 14, Section 1 of the Constitution, which states that taxes, fees and other forms of levies shall not be imposed or altered except by law.

In a press release issued yesterday, the opposition stated that the finance ministry on July 24 had exempted the payment of customs duty and sales tax to encourage all Bhutanese to read, especially in the context of the National Reading Year 2015.

However, it states that the provisions cited by the finance ministry from the Sales Tax, Customs and Excise Act 2000 in the notification to authorise this exemption are null and void as per Article 1 Section 14 of the Constitution and the Supreme Court’s verdict on the first constitutional case between the Government and the Opposition Party.

The opposition quoted the verdict, which states, “The inconsistent provisions of the Sales Tax, Customs and Excise Act 2000 must be deemed to have been eclipsed by the latter law.”

The latter law, the opposition said, refers to the Constitution and the Public Finance Act 2007. “The exemption of taxes without due parliamentary process is a direct violation of the Constitutional provision and it clearly tantamount to alteration of taxes,” it states.

Following an appeal from 11 bookstore owners in Thimphu, the finance ministry had lifted both the customs duty and sales tax for all books imported during 2015. The tax issue arose in May when the Department of Revenue and Customs suddenly enforced a 20 percent customs duty on books imported from India but printed in a third country.

While books printed and imported from a country other than India are subjected to a 20 percent customs duty and a five percent sale tax, books imported from India were being exempted from customs duty until May.

The opposition’s press release further states that the Supreme Court verdict had stated that “imposing and altering of taxes must be decided by the elected representatives of the people in its entirety and not only by a sub-group represented by the executive.”

“Under no circumstances the authority to impose or alter taxes may be delegated to the executive…The imposition or alteration of taxes must comply with the legislative process for making laws at all times as provided under sections 234-238 of the National Assembly Act.”

The opposition party, the press release states, is deeply concerned with the repeated unlawful acts of the government. “While it is not our intention to stop the incentives to the book dealers, we urge the government to abide by the provisions of the Constitution and the ruling of the Supreme Court on the first Constitutional case and follow the due legislative process in all its actions.”

Finance minister Namgay Dorji said that the decision to exempt the payment of customs duty and sales tax was taken based on Chapter 2, Section 3.2 of the Sales tax and Chapter 3, Section 5.2 on Customs , Sales Tax, Customs and Excise Act of Bhutan, 2000.

“These provisions state that ‘on satisfaction and in the public interest, the ministry of finance may exempt a person from the payment of sales tax or customs duty,” he said adding that these provisions give the finance minister the authority to exempt the payment of taxes.

Lyonpo added that the government did not alter the rate of taxes, the authority of which rests with the Parliament.

But, he pointed out the Supreme Court verdict also states that the “Government under Section 6 Article 14 of the Constitution has the responsibility of ensuring that the cost of recurrent expenditures is met from internal resources of the country, it is the prerogative of the government to declare and grant fiscal incentives or to propose taxes to meet expenses of the government.”

“It’s regretting to note that the opposition has failed to understand these provisions of law and I am surprised that they did not refer to these laws,” Lyonpo said.

Sonam Pelden

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