Tax revision hits farmers

The tax revision approved by parliament during its last session, some farmers say, has affected them.

Earlier, import of farm machinery spare parts was exempted from taxes. No more.

Farmers say taxing spare parts of farm machinery used in a few pockets of the country will hamper the government’s goals of farm mechanization and food security.

The 7th session of parliament approved the revised rates of five percent sales tax and 10 percent customs duty on spare parts of all kinds of machinery and vehicles.

However, no tax is imposed if the spare parts are bought along with machines.

Officials from the Department of Revenue and Customs say since most spare parts of plants and machinery could be used in regular vehicles, they were imported in the name of agricultural machinery to avoid payment of taxes. Therefore, there was a need to impose taxes on farm machinery spares parts as well.

The tax revision, officials say, will harmonize and standardize tax rates.

Farmers who use agricultural machinery say the government’s inability to authenticate the import of machinery spare parts should not affect them.

However, officials say that only a handful of farmers use farm machines.

The store manager of Agriculture Machinery Centre (AMC) in Paro said the tax for import of machinery spare parts is sometimes as high as 40 percent depending on the type of item. AMC is involved in effective and efficient distribution of agricultural equipment to the farmers.

Spare parts of most farm machinery come from Japan, which makes them expensive, and their prices are often affected by fluctuation in currency exchange rates.

The machines from AMC come at subsidized rates, which are reasonable. But specific orders are placed abroad for spare parts according to the demand of farmers. Therefore, the cost becomes high.

Today, AMC supplies about 41 pieces of agriculture machinery and 34 different machinery spare parts.

Farmers mostly buy spare parts for power tiller, rice mill, flour mill, oil mill and diesel engines.

By Sonam Pelden

3 Responses to “Tax revision hits farmers”

1. samchar says:

   December 30, 2011 at 11:21 am

   something wrong is happening in Bhutan.

   Tax revision should have been carried out for the high income group not the other way round, where our farmers who are the backbone of our agriculture sector, are affected.

   How can agriculture, the primary sector grow and contribute to the GDP if taxes are levied instead of subsidising the farm machineries?

   In the context of our growing economic debt, such tax revision where only our farmers are affected, is a dangerous move. It seems that Bhutan does not have real economists. Maybe high time we hear economic experts from outside to advise the government.

   the manufacturing industries in our country who are doing business and competing outside are doing so simply because of the advantage of the subsidized electricity that the govt. provides. actually these are sectors that need to be taxed heavily.

   govt. needs to be serious if we are to achieve economic development sustainably and become economically self reliant. if we are to reduce food imports (especially rice and other cereals and vegetables) and achieve food self-sufficiency, then taxing the agriculture sector is not the way. It is going to retard the growth of our agr. sector.

   Rather, in the face of growing debt, it is high time that our parliament revise the taxes like BIT and CIT to generate revenue and meet the development expenditures.
   if corrective measures are not taken immediately, then we might face serious economic issues leading to high unemployment rates, serious income disparities etc.
   For a small country like Bhutan with population of just 0.6 million plus, unemployment rate of 2.5% is too high, although it may be a globally accepted figure. It is too high for Bhutan. We can’t be complacent.

   Reply
2. LasoLa says:

   December 31, 2011 at 2:05 am

   I totally agree with Samchar. PIT and CIT increment is highly recommended. I would also go a step further to propose that all lands and property in the urban areas be taxed high. A small increase in this tax will benefit the country a lot. At the moment a plot owner of 15 decimal land in Taba or Babesa for example is paying only Nu 5 a year. Can you imagine that. The land tax has not been revised since 1992. If our policy and decision makers could understand this face we wont need the almighty to halp save the country.

   Reply
3. Kezang says:

   January 17, 2012 at 1:00 pm

   All thanks to our novice politicians, who are also mostly sons of Bhutanese farmers…

   Reply