Rural taxes lost in collection

29 May 2009

The Royal Audit Authority (RAA) has recommended the government to institute a systematic rural tax collection. According to the RAA, lapses in collection of rural taxes have been a major issue in the gewog administrations.

Recent audit reports show shortfalls of Nu 0.315 million from rural tax collections in Chhukha, Dagana, Mongar, Samtse, Wangdue and Zhemgang dzongkhags. The lapses have occurred because of non-collection or non-deposition of taxes, non-maintenance of taxes in gewog accounts and misuse of tax money.

The RAA has suggested that the government make sure there is an efficient collection of rural taxes at a minimum cost possible. The report says that more money is spent in collecting taxes than the actual amount collected as taxes.

Local administrators have pointed out the difficulties in locating and collecting taxes. According to them, the increasing mobility of residents has resulted in non-residents buying properties in the rural and sub-urban areas which has made collection of rural taxes in many dzongkhags difficult.

In most reported cases, the government has not taken any action against the officials responsible.

Dorji Tenzin, an official from the RAA, said that, although the cost of lapses was not huge, it was a trend that had been developing over the years. “While auditing, the gups provide all necessary receipts of taxes collected and since auditing is based on documents, we find all collections complete.”

He added that, since the amount of taxes was less than the expenses incurred to collect the taxes, the gups preferred to pay the missing amounts from their own pocket to get the issue resolved. Dorji said there was a trend of such observations in the rural taxation system every year.

According to Choyzang Tashi, the Director of the Department of Revenue and Customs (DRC), the department is no longer responsible for rural tax collections. Collection of rural taxes was decentralised to gups two years. This was done so that the tax funds could help in the development of local communities.

T.B Chhertri, the head of the Revenue Accounts and Audit section of the DRC, said that, prior to the decentralisation of rural taxation system, there were regional revenue clerks who monitored the taxes on a monthly and annual basis.

Today, although the DRC has estimated amounts of taxes collected yearly, the actual collection figures are with the dzongkhags. Another official of the DRC said there was a need for a clear delineation of responsibilities between the Finance Ministry and the Home Ministry with regard to rural tax collection.

The official suggested that there should be a scheme whereby non-resident property owners could pay their taxes without having to go to the gewogs. Officials say they doubt if there are any penalties in case of delay in rural tax payments.

By Pushkar Chhetri

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