World Bank Economist: Do Away With Irrational Exemptions to Attain Fiscal Self-Sufficiency

This morning I was scanning through my Blog statistics and I was surprised to see that there were 7 people reading my old post dated Friday, May 26, 2017, titled: Hydro Revenue Can’t Assure Self-reliance:

http://yesheydorji.blogspot.com/2017/05/hydro-revenue-cant-assure-self-reliance.html

Very interesting! I think the readers were making a connection with the post - as a consequence of my recent post on the formation of the 4th Pay Commission:

http://yesheydorji.blogspot.com/2019/01/the-winning-team-for-history-books.html

If you read my older post of May, 2017, you will notice that I make reference to a public talk given by Mr. Martin Rama, World Bank’s Chief Economist of South Asia Region. Moving away from hydro-power, the following is what he had to say, in relation to our quota system:

“…… the decline in tax revenue in relation to GDP is not due to a change in tax instruments or in tax rates, but because of policy decisions of tax holidays and exemptions. Sales Tax exemptions result in 50 percent of foregone revenue. Further around 63 percent of all imported commodities are exempted from Custom Duties.”

“Instead of losing tax revenue to exemptions that are not rational, efficient management of taxation could also play a vital role in attaining fiscal self-sufficiency.”

The World Bank Economist is in no doubt what Bhutan must do.