𝐄𝐱𝐜𝐢𝐬𝐞 𝐓𝐚𝐱 𝐁𝐢𝐥𝐥 𝟐𝟎𝟐𝟓 𝐑𝐚𝐢𝐬𝐞𝐬 𝐂𝐨𝐧𝐜𝐞𝐫𝐧𝐬 𝐀𝐦𝐨𝐧𝐠 𝐒𝐦𝐚𝐥𝐥 𝐁𝐮𝐬𝐢𝐧𝐞𝐬𝐬𝐞𝐬 𝐚𝐧𝐝 𝐂𝐨𝐧𝐬𝐮𝐦𝐞𝐫𝐬

…𝒑𝒓𝒐𝒑𝒐𝒔𝒆𝒅 𝒉𝒊𝒌𝒆𝒔 𝒐𝒏 𝒂𝒍𝒄𝒐𝒉𝒐𝒍 𝒂𝒏𝒅 𝒕𝒐𝒃𝒂𝒄𝒄𝒐 𝒅𝒖𝒕𝒊𝒆𝒔 𝒂𝒊𝒎 𝒕𝒐 𝒊𝒎𝒑𝒓𝒐𝒗𝒆 𝒑𝒖𝒃𝒍𝒊𝒄 𝒉𝒆𝒂𝒍𝒕𝒉 𝒃𝒖𝒕 𝒓𝒂𝒊𝒔𝒆 𝒇𝒆𝒂𝒓𝒔 𝒐𝒗𝒆𝒓 𝒆𝒄𝒐𝒏𝒐𝒎𝒊𝒄 𝒊𝒎𝒑𝒂𝒄𝒕 𝒐𝒏 𝑺𝑴𝑬𝒔

By Yeshi Dolma

Private sector is preparing for increased financial pressure as the National Assembly debates the Excise Tax Bill 2025. The bill proposes higher excise duties on alcohol and tobacco products with the goals of reducing harmful consumption and increasing domestic revenue. Between July 1, 2024, and April 18, 2025, the Department of Industry issued alcohol service licenses to 2,043 restaurants- businesses likely to feel the impact of the tax changes.

Finance Minister Lyonpo Lekey Dorji emphasized the government’s intention behind the reforms. “Our aim is to restructure the tax system in a way that promotes responsible consumption while increasing domestic revenue,” he said during the National Assembly session. He added that the reforms align with broader efforts to address lifestyle-related health issues and reduce dependence on imported goods that affect national health.

While the government projects benefit like improved public health and higher revenue, business owners and economic experts warn of short-term hardships, especially for small and medium enterprises (SMEs). The Annual Macroeconomic Performance and Outlook Report 2025 highlights the need to deregulate markets and align fiscal policies with sustainable growth.

For many local businesses dependent on alcohol and tobacco sales, the proposed tax hikes could reduce profits and customer demand. A restaurant and bar owner in Thimphu shared his concerns: “We are already struggling with high rent and increasing operational costs. Alcohol sales are our primary income source. If the price goes up due to the new tax, we fear customers will turn to retail outlets for cheaper options, which could hurt us badly.” He added that without government support, small bars and eateries might not survive the added burden.

Similarly, a pan shop owner said her livelihood depends largely on cigarette and doma sales. “Most people who come here only buy cigarettes and doma. For everything else, they go to bigger stores. If cigarette prices increase again, my customer base could shrink further,” she said. She described the reforms as well-intentioned but warned they threaten the survival of small vendors with limited products and tight margins.

Consumers also expressed concern. Tshering Yangki, a self-described chain smoker, spoke about the difficulty of quitting despite repeated attempts. “I spend over Nu 15,000 a month on cigarettes. I know the government wants to help us quit, but I have tried everything and nothing works. During COVID, even when cigarettes were expensive and hard to find, I still managed to get them. This new tax will only make it harder financially.” She urged the government to consider subsidized cessation programs or nicotine replacement therapy for those willing to quit.

Tshering Delkar, a working woman whose husband drinks regularly, questioned whether higher taxes would reduce alcohol consumption. “Half of his income goes to drinking, and thankfully, I work too, so our daily expenses are covered. But I don’t think the tax will stop him. It might just make him spend more of his income on alcohol. The government should invest more in rehabilitation centers. I have heard people who went there actually quit drinking,” she said. She called for increased access to treatment and awareness as a more sustainable approach.

An ex-civil servant echoed these concerns, noting that price increases alone will not change behavior. “We have strong laws, but enforcement is weak. The problem isn’t just the availability of alcohol and tobacco, it’s the fact that young people now smoke openly in public and nobody says anything. It’s become normalized,” he said. He pointed to Japan as a successful example, where strict enforcement, public awareness, and social norms reduce consumption.

Other countries demonstrate effective control through strong regulation and community efforts. Singapore enforces a smoking ban with heavy fines, surveillance, and designated smoking areas. Finland limits tobacco and alcohol marketing, restricts sales to minors, and offers state-funded cessation services. Japan uses cultural norms, advertising bans, and school education, including vending machine ID verification. Sweden controls alcohol sales through a state monopoly and national campaigns to discourage consumption and advertising.

In Bhutan, despite legal prohibitions, smoking in public remains common. A tourist guide recalled a recent tour at Changjiji Youth Park where foreign visitors noticed young people smoking. “They asked me, ‘Isn’t smoking banned in Bhutan?’ and I didn’t know how to respond. It was quite embarrassing,” he said. He welcomed the tax reforms but stressed that enforcement must improve. “If we are going to raise taxes to reduce consumption, we also need to make sure the laws are implemented effectively,” he added.

The National Assembly debate has drawn wide attention as business owners, health advocates, and citizens await decisions that could reshape Bhutan’s economy and social fabric. While the government’s long-term goals are clear, immediate support measures- education, rehabilitation, price controls on alternatives, and stronger enforcement- will be essential for meaningful change.

The success of Bhutan’s excise tax reform will depend on balancing public health objectives with economic realities, drawing on global best practices that combine legal frameworks, education, and community participation.