COUNTRY BACKGROUND - Gross National Happiness Commission

Fiscal and Monetary Policy
Table 8.1 Tax Revenues 1985/86-1990/91
II. Revenue and Taxation Policy and Targets for 7FYPII. Revenue and Taxation Policy and
Targets for 7FYP
Principles of Revenue and Taxation PolicyPrinciples of Revenue and Taxation Policy
8.4 During 7FYP the Government's main concerns will be:
(a) to ensure that the volume of revenue it draws from the economy is sufficient to finance an appropriate level
of public expenditure without stifling or destabilising the rest of the economy;
(b) to raise revenues (and to distribute expenditures) in ways that are equitable in their incidence (taking
income, sex, and geographical differences into account);
(c) to ensure that the taxation system as a whole provides an appropriate set of incentives to individuals and to
enterprises.
8.5 The last of these concerns is especially relevant. The private sector oriented, growth promoting strategy of this
Plan will involve less direct intervention by the Government in the economy: instead, Government will try to
ensure that the prices of inputs and outputs in the economy reflect their true costs to the nation, so that the
independent decisions of private sector producers make the best use of the resources available. It is therefore
important to ensure that tax measures aimed primarily at raising revenue do not at the same time distort the
incentives that producers and consumers face.
8.6 The scope for raising additional domestic revenues will continue to be limited by:
2
TAX REVENUE
Direct tax
Indirect tax
1985/86 1986/87 1987/88 1988/89 1989/90 1990/91
budget
44.1
91.8
62.9
109.3
77.1
158.8
80.2
152.4
75.5
156.2
80.6
201.7
TOTAL TAX REVENUE 135.9 173.8 232.3 232.6 231.7 282.3
TOTAL NON-TAX REVENUE
of which Chhukha
97.3 139.3 491.6
296.9
479.8
254.5
540.3
276.9
594.3
406.1
TOTAL CAPITAL REVENUE 12.9 15.5 12.1 11.7 53.6 24.4
TOTAL RECEIPTS DEPT.
ENTERPRISES
TOTAL OTHER NON-REVENUE
RECEIPTS
6.6 6.7 7.5 6.9 7.5 8.0
5.1 4.8 6.0 2.3 3.9 4.6
ALL REVENUE RECEIPTS 257.5 340.1 753.1 733.3 837.1 913.6
Source: CSO Statistical Yearbook and DNBA.
(a) low average incomes, combined with the limited monetisation of much of the economy; and,
(b) Bhutan's special trading arrangements and monetary links with India, which limit RGOB's freedom of
action over some revenue sources, especially trade taxes.