Opposition says the government should table the Bill in the winter session of the parliament
Tashi Wangmo, Thimphu
Calling it ‘a big failure’ of the government to combat the ripple effects of Goods and Service Tax (GST), introduced in India, the Opposition camp is demanding that the government have to introduce the GST Bill by the winter session of the parliament.
The Panbang Member of the National Assembly, Dorji Wangdi, said that the new taxation system in India is gravely affecting Bhutan’s economy, especially manufacturers. “It will further worsen our current account deficit and affect the balance of payment,” he said.
“The government had pledged to introduce Value Added Tax (VAT) which is the synonym of GST even before they came to power. It was presumed to be the main tool to safeguard our economy in the event of any major tax alteration in India. And India, which is our major trading partner had been discussing about GST for many years. The government should have been fully prepared of such economic implications. But what did the government do? And where is their new VAT system?” the MP asked.
He mentioned that the government should have taken into the consideration that Bhutan exports 81 percent of the total exportable goods and imports 90 percent of goods from India.
“Any major economic reform in India will definitely send a huge wave across Bhutan, and in this case, we were well aware that India will adopt GST soon. The government by now should have been prepared to counter this problem,” said Dorji Wangdi.
Further, he said that the government had taken out the custom part from the Customs, Sales and Excise Duty Act of 2000.
“The Economic Development Committee of the National Assembly had recommended the government that the sales tax has to be added to custom and excise duty but the government did not pay us a heed,” said Dorji Wangdi.
He mentioned that Bhutan’s trade deficit with India had exceeded Nu 23 billion while it is less than Nu 9 billion with other countries. “From now, our excise duty refund from India will also go down drastically since our cement and steel manufacturers will not have a competitive edge in the Indian market,” he added.
However, he said that it is good news for consumers of the imported goods since prices will drop.
Meanwhile, GST is a single taxing system on the supply of goods and services, right from the manufacturers to the final consumers. Under this sytem, the consumers will bear tax charged only by the last dealer in the supply chain. This will offset taxes charged in the previous stages of the value additions and refine the taxation system. Products will then become cheaper.