MoEA suggests axing five percent sales tax, green tax on fuels

… if fuel price comes to a threshold rate, the taxes will be re-introduced

To offset the soaring fuel prices in the country, the Ministry of Economic Affairs is suggesting the government to axe the five percent sales tax, and five percent green tax on fuels.

However, this will have to undergo review at the parliament.

The fuel price increased five times from March till date.

A liter of petrol was Nu 45.43 and diesel was Nu 37.88 in May last year which is now Nu 97.00 and 111.44 respectively.

The Ministry of Economic Affairs (MoEA) has suggested the government to do away with five percent sales tax and five percent green tax on fuel.

“A little surcharge, if we could do away, will give some space of relief to the consumers. Probably this will be discussed in the coming parliamentary session,” said the Lyonpo.

He added, “I don’t know how the discussion will turn out in the parliamentary session.”

However, Lyonpo stressed, “I will suggest the government to form a policy whereby, if the fuel price drops to certain threshold rate, we will re-introduce the 10 per cent tax.”

“Whenever the fuel price shoots up to certain rate, we should waive off the taxes. It will be a convenient method in the future too.”

“When the price of fuel hit Nu 80 or Nu 90, it’s difficult on consumers,” he said.

MoEA will find the average of fuel price for the last five years (2018-2022) to decide on scrapping the surcharge. If the price drops below the average, MoEA will re-introduce the tax or even introduce other charges to stabilize the fuel price.

The government is waiting and following the fuel price trends in other countries and the producers to take action. It has been some time now.

“We will wait. If it takes longer duration to see fuel price reduction, we suggest to do away with the taxes. That’s the only tool we have,” said Lyonpo.

The Lyonpo also claimed that the government cannot subsidize fuel. “Because we don’t have much resources to subsidize for long run.”

There is Nu 700 million (M) Economic Stabilization Fund. But it will not be used to stabilize fuel price.

“Pumping in 700M stabilization fund will not make many differences. It’s not enough.”

“The stored fuel could hardly last a week,” said Lyonpo.

Lyonpo also highlighted that there is no need for the people to panic.

“For now, there’s no fuel crisis in Bhutan. We should not take rising fuel price as a crisis,” he added.

Also, the fuel stations in Thimphu are overwhelmed with many anxious vehicle owners lining up to fill up their vehicles.

Talking about measures to curb such soaring fuel prices, Lyonpo said building reservoirs would ease the inflation of fuel price in the future.

Thukten Norbu, a manager with Bhutan Oil Distributor (BOD) at Lungtenzampa, said, “We are overwhelmed to see long queue of vehicles causing traffic jam at the station.”

“People must have heard some rumours lately that boosted our sales,” he added.

He also told Bhutan TODAY that some people were seen waiting for hours.

Many were seen trying to hoard fuel, some even filling up their jerry cans.

A taxi driver said, “We have to look for ourselves if the government does nothing on rising fuel price,” adding, “our livelihood depends hugely on fuel.”

Bhutan has only one fuel depot at Thingchuphangka with a shortage capacity of 2,000 Kiloliter (KL).

Today, the depot has 1,000KL of diesel and 1,000KL of petrol reserve.