Domestic revenue estimated to grow by 7% for FY 2021-22

Tax revenue during the FY 2021- 22 is expected to grow by 25% from -19% in FY 2020-21

The domestic revenue is estimated to grow by 7% from a drop of -8% in Financial Year 2020-21.

This is as per the Budget Report for FY 2021-22 that was presented to the parliament yesterday by Finance Minister Namgay Tshering.

The domestic revenue is estimated at Nu 35.6bn of which 64% is tax revenue and 36% is non-tax revenue.

The minister said that the positive revenue projection is based on the expected increase in tax revenues mainly attributed to improved direct tax performance.

With accelerated government investment activities coupled with the mass inoculation programs, economic activities are anticipated to pick up in various sectors, contributing to the growth in tax revenues, according to the report.

The Lyonpo also stated that besides improved performance in direct taxes, indirect taxes such as sales tax, domestic excise duty, and green tax are also expected to grow proportionately.

The increase in indirect taxes is mainly due to the government’s expansionary fiscal approach through intensive capital investment activities and increased government consumption.

As a result, tax revenue during the FY 2021- 22 is expected to grow by 25% from -19% in FY 2020-21.

During the presentation, the minister said that the FY 2021-22 budget is a milestone as it captures the essence of the Royal Kasho for Civil Service and Education Reforms and provides budget to embark on the reform initiatives.

The budget for the FY 2021-22, is formulated with the theme to ensure “Sustained Economic Stability for a Resilient Recovery” and  that the government pursues an expansionary fiscal stance with the overall objective to maintain public confidence, sustain economic activities, transform health and education system, leverage on ICT and innovation and enable reform initiatives.

During the presentation, the Lyonpo said that as we go through unprecedented times, there is a need for innovative and realistic planning and budgeting. Therefore, the budget for the FY 2021-22 has been formulated with the theme to ensure “Sustained Economic Stability for a Resilient Recovery”.

For the FY 2021-22 budget aims to fulfill the fiscal objectives by setting the fiscal targets like contain fiscal deficit below 5% of the GDP, minimum GDP growth of 3%, tax to GDP ratio of at least 11%, recurrent expenditure to be covered by domestic revenue and non-hydro debt maintained below 35%.

The House referred the Bills to the Economics and Finance Committee for further deliberation. The Committee is scheduled to report back its finding and recommendation to the House on June 8.

Dechen Dolkar from Thimphu