How do Bhutanese people feel about revised Tax laws on imported goods?

Revision of Imported Tax in Bhutan:

On 8th of November 2022, the Tax Bill of Bhutan was unveiled by Finance Minister Namgay Tshering during the National Council sessions which included an increase in the indirect customs duty (CD) for imports from third countries as well as the sales tax (ST) and green tax (GT) on a variety of goods. Some of the products that will and already are seeing tax increases include imported furniture, meat, cement, plastics, junk food, tobacco, and automobiles. This revision was done as a means to revive the economy of the country which was hampered due to the impacts of the pandemic and was further aggravated by the recent Russian-Ukraine war. However, import taxes on basic food commodities like grains, dairy products, and oil have decreased. To support local industries, taxes have also been raised on products sold in the nation since the previously provided loan of 2.5 billion is insufficient.

Paro town, Bhutan. Photographer: Chencho Dorji

According to the Finance Minister, imported junk food is also subjected to increased taxes to combat the rising incidence of non-communicable diseases like diabetes brought on by the consumption of unhealthy foods like noodles, pasta, sugar biscuits, ice cream and more.

List of some tax-subjected items and their increased rates as of 8th November 2022:

1. Imported meat ( processed, frozen and raw): 20%

2. Seafood, sausages, hams: 10%

3. Betel leaves: 10%

4. Junk food items such as pasta, sweet biscuits, pastries and cakes, rusks, and juices exceeding 250 ml: 10%

5. Imported ice cream: 15%

6. Chips: 30% with 10% on customs duty.

7. Imported mineral water: 20%

8. Tobacco: 100% sales tax in addition to 10% customs duty.

9. Imported cement: 10%

10. Plastics in general: 10%

You can check the detailed rates for automobiles in the link below:

https://thebhutanese.bt/taxes-increased-on-imported-furniture-meat-cement-plastics-junk-food-and-decreased-on-essentials/?fbclid=IwAR2pMLJBUtC8ckmyK5nRAlJwjDD34wFaxPTnY_BCLkCXylLw5tmsbuYwF_E

List of imported items with decreased rates:

1. Beans, peas and lentils: 10% on custom duty.

2. Rice, brown rice, maize, corn, cereals, wheat and oat: 10% on custom duty.

3. Cooking oils: 10% on customs duty.

The netizens’ opinion:

In a post on The Bhutanese’s Facebook page, many netizens discussed their thoughts on the revision.

Some people have been wondering if the country's retailers would reduce the cost of necessities for which taxes have been lowered or eliminated. They also emphasized the need for authorities to keep a careful and strict eye on market conditions. Some netizens also believed that this was a bad strategy as local farmers and producers of furniture would raise prices and ultimately worsen the rate of inflation. They also suggested that the Ministry of Economic Affairs keep an eye on the cost of necessities since they are more expensive when they are not taxed. Furthermore, people believe that the need for a tool to track market price growth will become more pressing after the increase in import taxes. Additionally, some believe that raising import taxes will result in price differences between the Indian and Bhutanese markets. which means it would only encourage smuggling cases and the illegal importation of products. They felt that the government ought to have taken this into account before enacting new tax laws.

People also expressed concerns over an increase in tax on small cars and their parts. Since these cars are purchased by common people and low-income groups, the increase could potentially cause stress for first-time automobile buyers, who are already having a hard time. Given the inadequate number of public transportation services, making small private vehicles affordable was what they hoped for.