Advantages Of Taxation In Bhutan

Taxation is a system of raising money for financing developmental activities by the government. Throughout history, people have debated the amount and kinds of taxes that the government should impose and how the burden of taxes are distributed across society. In order to maintain financial budget, the Royal Government of Bhutan raises majority of its government revenue through collection of tax payable by the general public.
The taxation system involves individual tax-payer making payments to the Central Government, and Local Government under various categories such as personal income tax, value added tax in the course of business. RMA and MOF (as cited in IMF, 2014) points out that Bhutan’s domestic revenue constitute tax revenue (13.4% of

He believes that progressive nature of tax can help in reducing rise in income gap. This explores details on how progressive tax system can enhance income equality in which progressive tax advocates redistribution of income within the society.
Progressive tax helps in redistribution of the income (Hartman, 2002; “Progressive”n.d.). Furthermore, progressive tax proposes that equal circulation of income results in rising wellbeing of the society, as the wealthier individuals will sacrifice only their comforts, whereas the poor individuals will be competent of satisfying their necessities to a better degree. Hence, progressive taxation helps in making a society better off. Progressive taxation in an economy serves as a source of revenue for the government by collecting higher amount from higher earners. As a result, it helps in generating more income. Along with this, it provides safety nets where tax falls with fall in income. This provides protection to generally low- and middle income tax

Import Duty
A tax collected on imports and some exports by the customs authorities of a country.
4. Green tax
Tax imposed on environmental pollutants or on goods which produces pollutants. Example: Vehicle tax in Bhutan.
5. Other indirect taxes
Other indirect taxes includes, a specific tax, value added tax (VAT), or goods and services tax (GST).
Tax Structure of Bhutan
The tax revenue increased by 5.1% which can be attributed to an increase in corporate income tax (26%) and personal income tax (15.2%). The Non-Tax Revenue increased by 23.9 percent with significant increase under dividends (24.5%) and interest on loans from corporations (32.8%) (Department of Public Accounts, 2014).
Revenue generation from hydropower stems from both tax and non-tax revenues. The share of hydro revenues in total domestic revenues has declined recently. On average, the direct share of hydropower revenues in total revenues has been just over 30 percent(IMF, 2014). From a cross country perspective, Bhutan ranks below average in terms of tax revenues from among a wide set of low and low-middle income countries. It is being compensated by higher non-tax revenues which are mainly attributable to the hydropower sector. (See Annexure