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While the People’s Democratic Party’s (PDP) flagged off its campaign with statements that the 100 units of free electricity and business tax waiver in the rural areas are being withdrawn at the end of its term in office, Kuensel found that these subsidies and waivers were still provided.

Free energy and rural tax waiver not lifted

While the People’s Democratic Party’s (PDP) flagged off its campaign with statements that the 100 units of free electricity and business tax waiver in the rural areas are being withdrawn at the end of its term in office, Kuensel found that these subsidies and waivers were still provided.

The PDP president Tshering Tobgay campaigned in Punakha, Wangdue,T sirang and Dagana on the retraction of such policies at the end of PDP’s tenure. “Should PDP get the mandate to form the government again, 100 units of free electricity and rural business tax waiver would be reinstated,” Tshering Tobgay had said during his campaign.

On the free 100 units of electricity, top officials from the Bhutan Power Corporation said that electricity tariff determination is a three-year cycle. This means that tariff for three-years period is pre-determined with progressive revision annually. This includes the royalty energy the government receives from the hydropower plant, which are used in subsidising rural, low and medium voltage consumers.

A total of 100,008 rural homes have benefitted with almost 195 million units of energy amounting to Nu 355M in five years. This means that rural households consuming less than 100 units of electricity enjoyed free energy and urban users consuming the same amount of power are charged about Nu 2 a unit. 

Had it not been for the subsidy, even the urban low voltage users would be charged more the Nu 5 a unit of electricity.

Technically, the so-called free electricity is not exactly free. The government uses the royalty energy it receives from the hydropower plant to subsidise the cost of supply to rural customers. The government will have to pay BPC Nu 526 a household a month for 100 units, meaning that the government will have to forego its revenue.

Until 2019, the free electricity or subsidies to rural homes, low and medium voltage users would continue, as the last tariff revision was effective from January 2017 to July 1, 2019. This means that free electricity will continue until 2019.

Kuensel also gathered reports from the field and the most recent electricity bills in Tsirang, for instance, provided free 100 units of electricity.

Kuensel also found that the exemption on rural business tax would continue until the Parliament amends the tax law.

The country has foregone, Nu 26M in 2017. Although the number of micro businesses exempted decreased from 11,571 units in income year 2015 to 9,643 units in income year 2016, the amount of tax foregone increased from Nu 22.25 million to Nu 25.58 million during the respective years.

Sources from the ministry of finance said that the government has no authority to alter, modify or revise taxes. “The power rests with the Parliament and the Constitutional case is evidence enough,” an official said.

The rural business tax exemption was implemented after amendments were made to the tax laws and to lift such waiver, the Parliament has to endorse it.

As the National Assembly remains dissolved, people are questioning as to how authorities can do away with the waiver.

  Tshering Dorji

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