COUNTRY BACKGROUND - Gross National Happiness Commission

Economic Performance
Domestic RevenuesDomestic Revenues
2.18 The main features of domestic revenues in the 6FYP were:
(a) A relatively small contribution from tax revenues; since 1986/87 the share of tax revenues in total domestic
revenues has fallen from about 50% to just over 25%. only around half of total revenues prior to
Chhukha). Direct tax revenues amount to only 5-6% of GDP, which is low by international standards.
(b) Two thirds of tax revenues are from indirect taxes.
(c) So-called "non-tax revenues", which mainly comprise surpluses/profits of public enterprises plus royalties
and dividends, are very important. In 1989/90 non-tax revenues accounted for almost three quarters of
the total, and revenues from the Chhukha Hydel Project alone accounted for one-third of revenues.
2.19 Domestic revenue has always fallen far short of total expenditure and only after Chhukha came on stream
(1987/88) did domestic revenues first cover current expenditure. In 1987/88 there was a small overall budget
surplus (comparing total expenditure against domestic revenues plus external grants), but in 1988/89 and
1989/90 there were large overall deficits, mainly financed by external borrowing in 1988/89 and by running down
cash balances in 1989/90. In 1990/91 and 1991/92 the Government was forced to cut back sharply on expenditure
in order to avoid an excessive overall budget deficit.
8
Figure 2.3