𝐄𝐱𝐜𝐢𝐬𝐞 𝐓𝐚𝐱 𝐁𝐢𝐥𝐥 𝐀𝐝𝐨𝐩𝐭𝐞𝐝 𝐀𝐦𝐢𝐝 𝐃𝐞𝐛𝐚𝐭𝐞 𝐎𝐯𝐞𝐫 𝐆𝐒𝐓 𝐈𝐦𝐩𝐥𝐞𝐦𝐞𝐧𝐭𝐚𝐭𝐢𝐨𝐧

…𝒑𝒖𝒃𝒍𝒊𝒄 𝒆𝒙𝒑𝒓𝒆𝒔𝒔𝒆𝒔 𝒄𝒐𝒏𝒄𝒆𝒓𝒏 𝒂𝒔 𝒍𝒂𝒘𝒎𝒂𝒌𝒆𝒓𝒔 𝒘𝒆𝒊𝒈𝒉 𝒇𝒊𝒔𝒄𝒂𝒍 𝒑𝒓𝒊𝒐𝒓𝒊𝒕𝒊𝒆𝒔 𝒂𝒏𝒅 𝒑𝒐𝒕𝒆𝒏𝒕𝒊𝒂𝒍 𝒑𝒓𝒊𝒄𝒆 𝒉𝒊𝒌𝒆𝒔

By Yeshi Dolma

The recent adoption of the Excise Tax Bill of 2025 has drawn mixed reactions from the public, with many citizens expressing concern over the expected rise in prices. Behind the government’s decision, however, lies a fiscal shift as the country moves from a low-income to a middle-income economy.

During a recent session of Parliament, lawmakers debated the timing and implications of implementing the Goods and Services Tax (GST), which is set to replace the current Bhutan Sales Tax (BST) starting in January 2026. The introduction of GST is driven by the need to expand the domestic tax base. As the country graduates economically, foreign grants that once supported public spending have significantly decreased. The government now faces the challenge of sustaining essential services and development efforts with reduced external aid.

Rinchen Wangdi, Chairperson of the Economic and Finance Committee and Member of Parliament (MP) for Bartsham-Shongphu, acknowledged the complexity of the shift. “There are both pros and cons with the implementation date of January next year,” he said, stressing the importance of proper planning to avoid unintended consequences.

MP for Radhi-Sakteng, Tashi Tenzin, raised concerns about the practical challenges of immediate GST enforcement. “If we implement the Bill immediately, then the current Bhutan sales tax (BST) needs to be abolished, which we cannot do. However, we can only implement it after the goods and services tax (GST) is implemented in January 2026,” he said.
He also pointed out the risk of double taxation. “BST and green tax are already included in the excise tax. Therefore, the prices of goods will soar high by paying sales tax along with excise tax,” he warned. He further noted that a rushed rollout could lead to hoarding. “People stock up goods when the tax is low and sell them when the new tax is implemented,” he added.

Agriculture Minister Younten Phuntsho, who represented the Finance Minister during the session, called for adherence to the planned start date of January 1 for the excise tax. He acknowledged operational limitations, stating, “The finance ministry has come up with an anti-hoarding strategy. It will be an issue with public service as the system is manually done if we implement it immediately.”

Opposition Leader Pema Chewang questioned the absence of the Finance Minister during a session of such importance. He expressed doubt over the need for delay. “For GST, it is mandatory to have a system, whereas for excise tax, it is not mandatory as they have been doing it manually. The only issue is related to an operation which is going against the Act,” he said, suggesting that postponement might not be necessary.

MP for Gangzur-Minjey, Loday Tsheten, criticised what he viewed as inconsistent messaging from the government. “When it was earlier suggested that the GST and excise tax could be combined, the government maintained they were entirely different in nature. Now, however, when the government says that the two should be implemented together, it seems inconsistent to me.”

MP for Thrimshing-Kangpar, Damche Tenzin, questioned the delay, arguing that the excise tax does not require extensive resources to enforce. “The excise tax, unlike the property tax, does not require much time or human resources. If that were the case, as a member of the legislative committee, I could support it. However, given the evidence that excise duty does not require extensive resources, he could not support a delayed commencement date, especially when the decision was put to a vote.”

Despite the divided views, the National Assembly voted in favour of the excise tax taking effect on January 1, 2025. Of the total members, 28 voted in support, 13 voted against, and two abstained. The House also directed the government to take full responsibility for any consequences that may result from the delay in implementation.

The debate reflects the broader economic challenge the country is facing. As Bhutan transitions to a middle-income nation, the reduction in foreign grants has created pressure to generate more internal revenue. The GST is a fiscal policy aimed at ensuring long-term sustainability of public services and infrastructure development.

While government officials and lawmakers are focused on securing fiscal stability, the general public is worried about the impact on their daily lives. Sonam Wangchuk, a shop owner in the capital, voiced his concerns. “Prices are already high, and now with GST coming in, I worry how much more expensive everyday goods will become,” he said. “Running a small business is already challenging with the current costs. If the GST pushes prices further up, many customers might reduce their spending, which could hurt my sales and livelihood. We understand the government needs money to fund important projects and services, but I hope they truly consider how these changes will affect ordinary people trying to make ends meet every day.”

Tashi Dorji, a farmer from a rural district, shared similar concerns. “I am worried about how this will affect farmers like me. If the taxes go up on equipment and supplies, it will be harder to sustain our livelihood,” he said. “Farming is already a tough job, and we rely on affordable tools, seeds, and fertilizers to keep production going. Higher taxes on these essentials could increase our costs significantly. That means either we have to work harder to make the same income or face losing our farms altogether. It’s a difficult situation, especially for small farmers who do not have much financial cushion.”

Karma Lhamo, a teacher from the eastern region, added her perspective. “While I understand the government’s reasons behind implementing GST, I worry about how it will affect families like mine. Middle and low-income households already struggle with rising living expenses, and higher taxes on goods could add even more pressure. I hope the government will also introduce support measures or subsidies to help those most vulnerable cope with these changes, so no one is left behind as we move towards a more sustainable economy.”

The gap between public concern and government policy highlights the challenge of implementing major economic reforms in a way that is both effective and equitable. As Bhutan prepares to implement the GST in 2026, ensuring that the public is informed, supported, and prepared will be crucial to the success of the transition. The excise tax is part of a broader strategy to strengthen domestic finances, but its long-term success will depend on careful execution and public cooperation.