Thukten Zangpo
Through a show of hands, the majority of Members of Parliament (MPs) voted in favour of the Cattle Tax Exemption Bill 2024 in the National Assembly yesterday.
The Bill will be adopted today.
The Economic and Finance Committee (EFC) submitted its review as directed by the House.
Radhi-Sakteng MP, Tashi Tenzin, a member of the EFC, argued that exempting cattle from taxation is essential to promote agricultural growth, enhance livestock productivity, and improve the livelihoods of farmers and highlanders.
He asserted that this exemption will yield broader economic and social benefits, especially in rural communities.
The cattle tax, established under the Revised Taxation Policy of 1992, levied a fee between Nu 1 and Nu 10 per cattle depending on the number. For instance, owners of up to 10 cattle paid Nu 1 per animal, while those with more than 11 cattle paid Nu 5 per animal.
The tax applied to a range of animals, including mithun, cows, yaks, buffaloes, horses, donkeys, goats, and sheep.
The waiver of the cattle tax was proposed during the drafting of Property Tax Bill 2022 but it could not be included in the final Property Tax Bill 2022 as the cattle tax does not pertain to immovable properties.
Recently, some local governments raised concerns with the Department of Revenue and Customs over the collection of cattle tax in their respective dzongkhag tshogde, questionining whether to collect the tax or not in line with the new Property Tax Act 2022.MP Tashi Tenzin said that there has been a disparity in the collection of cattle tax across the country, with minimal contribution to local government coffers.
According to the finance ministry’s figures, cattle tax revenue rose from Nu 0.31 million in 2015 to Nu 0.47 million in 2018—an amount that is negligible in the context of the country’s broader financial needs.
The EFC recommended the repeal of Section 57(c) of the Local Government Act of Bhutan 2009, which mandates gewog tshogdes to levy cattle taxes based on rates approved by Parliament. The proposal was supported by the National Assembly.
A key point of contention during the debate was the implementation date of the Bill.
The EFC suggested applying the Bill retroactively, from the day it was introduced in Parliament by the finance minister, reasoning that it is a “money bill”.
MP Tashi Tenzin said that the Section 46B of the Public Finance Act 2012 states that a money bill must be applied retrospectively from the day the Bill was presented in the National Assembly.
Deputy Speaker Sangay Khandu and Thrimshing-Kangpara MP Damche Tenzin argued that the Bill should take effect only after receiving Royal Assent from the Druk Gyalpo, in accordance with constitutional procedures.
The MPs also raised questions about whether other livestock, such as pigs, hens, and fish, should also be exempted from tax.
Nganglam MP questioned if the Bill addresses the taxation of cattle imported from neighbouring countries.
Finance Minister Lekey Dorji clarified that pigs, hens and fish were not included in the earlier censuses, and cross border purchases, which are subject to sales tax, differ from annual taxes. He added that cattle purchased from bordering towns are not taxable.
