Alcohol sold and hammered
As expected, the government increased tax on alcohol in the new budget presented to the parliament by finance minister Wangdi Norbu on Monday. A minister had given this hint last week, which indirectly is leakage of the government’s upcoming budget. Traditionally, government budget remains top secret until the time it is presented to the parliament.
The new budget has increased taxes on alcohol, light motor vehicles, vehicle and machinery spares, and packaged fruits juices while electric vehicles will receive tax exempt. Additionally, the minister proposed that tax on locally brewed alcohol be raised from 20-60 percent to 30-75 percent based on their categories. This will make the home grown products dearer and widen the market for alcohol from outside the borders.
Beer, both imported and domestically produced, will be dearer by 100 percent. Currently, domestic beers are tax 50 percent and imported beer 100 percent of their factory price. Many of the provisions of draft alcohol control regulations have been highlighted in the budget.
The alcohol sellers in the southern districts who bid two week before will panic now on. Rising price of the alcohol will paralyse them to pay the bid amount leading to collapse of the business. Or it will further encourage black market – with many alcohol suppliers in India sending alcohols through open borders. The AWP products will fail to get any market.
The 2011-12 budget outlay is Nu 27.9 billion, an increase of Nu 5 billion compared to last year, with resource gap of 5.3 billion. The government estimates to raise Nu 18.6B from domestic revenue and Nu 13.8B from external grants. The government expects that Bhutanese economy will grow by 6.5 percent much lower than previous years.
Similarly, total expenditure is estimated at Nu 38B, of which Nu 20.8 billion is capital expenditure, Nu 17.1 billion current expenditure estimate. Salary and wages account for 42 percent of the total current expenditure.
National Housing Development Corporation, Royal University of Bhutan, Gelephu and Samdrupjongkhar municipalities, Bhutan Chamber of Commerce and Industry, BBS, Druk Air and other organisations will receive subsidies that total Nu 1.3 billion.
The budget has given priority to education and health – two ministries receiving 24 percent of the total budget.