Thimphu thromde proposes revision of land taxes

Along with allocation of some percentage of the vehicle registration fees

Thromde:  Having proposed a revision of the existing urban land taxes to achieve financial sustainability, the Thimphu thromde is now working out the amount that would be submitted to the government.

Thrompon Kinlay Dorjee said that it was difficult for the thromde to meet the current expenditure through internal revenue, as the existing tax rates are based on the 1992 Tax Rate, which were low.

The existing urban land rate for commercial area is Nu 217.5 per decimal while for residential area it’s 108.75 per decimal, which translates to about Nu 14 million (M) annually as revenue for the thromde.

Thrompon Kinlay Dorjee said that the thromde receives less than Nu 100M annually from collection of taxes, fees and charges, which was difficult to meet the current expenses while the annual expenditure stood at about 140M to 150M.

“So we’ve also proposed sharing of vehicle registration fees to achieve financial sustainability,” he said.

The issue was also highlighted at the recent Thromde mid-term review on May 1 during which the thromde also proposed that they receive about 10 to 15 percent of the vehicle registration fee.

The fund, according to the thrompon, could be utilised for maintenance of the roads in the city. With the revision of the land taxes and allocation of some percentage of the vehicle registration fee, the thromde can do away with the government subsidy that they receive annually.

Thimphu thromde received about Nu 35M as subsidy from the government last year and about Nu 31M this year.

The thromde’s total budget outlay for the 11th Plan was about Nu 2B which includes assistance from the World Bank, Asian Development Bank and small development project. Of that the cumulative budget stands at about 1.2B and cumulative expenditure at about Nu 1.1B.

During the mid-term review, thrompon Kinlay Dorjee also highlighted the thromde’s cost cutting initiatives such as going paperless and replacing the existing streetlights with light-emitting diode (LED) and induction lighting system.

The thromde pays about Nu 700,000 as electricity bill for the 3,000 streetlights in the city.

During the mid-term review Prime Minister Tshering Tobgay asked the thromde to work out the amount of revision and submit it to the Cabinet. Lyonchoen also said that he does not see any issues in allocating about 10 to 15 percent of the vehicle registration fee to Thimphu thromde.

With construction of worth Nu 286M  the thromde office for which Nu 286M has been allocated dropped from the 11th Plan, Nu 20M is to be re-appropriated to construct three vegetable sheds at Jungshina, Babesa and Motithang. The remaining amount is to be re-allocated based on next financial year’s annual performance targets, the thrompon reported at the mid-term review.

The vegetable shed, according to thrompon Kinlay Dorjee, would help reduce street vendors and provide business opportunities and platform to the people living in the area.

Besides, construction of two multi-level car parking, bridges, water supply, local area plans, construction of labour camps and installation of streetlights are some of the major capital investments so far.

About 20 percent of the construction of the parking is complete while two of the four are almost complete with 95 percent of the work done. Works on the construction of the two other bridges in Thimphu are in full swing. Two water supply projects within the city were completed and 1,200 numbers of new energy efficient streetlights were installed while two low-income housing for thromde labourers are almost complete.

Kinga Dema

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