Corrupt quotas

The government’s decision to increase taxes on vehicles has caused a bit of stir.

Many people I’ve spoken with agree with the progressive taxes based on engine capacity. But most, like I, doubt if simply increasing taxes will help achieve the government’s goal of controlling the growing number of vehicles in Bhutan.

Why? Because public transport, in Thimphu and elsewhere, is still inadequate. And, in the absence of a reliable public transport system, we will continue to buy cars, even at relatively higher prices. A real reduction in traffic volume will be possible mainly by improving the public transport system to provide adequate coverage, and to make the service cheap, punctual, comfortable and, most importantly, popular.

But there’s another reason why increased taxes will not affect sales of imported cars: allotment of foreign vehicles, commonly called “quotas”, to public servants. Civil servants in Grade 6 and above are entitled to a quota once every seven years. And senior officers in the armed forces also enjoy a similar entitlement. Last year, some 380 quotas were issued. The year before that, many more, as every MP also received a quota.

Obviously, some public servants use their quotas as intended, that is to purchase vehicles for themselves. But many quotas find their way into the black market – they are sold, illegally and at hefty prices, to buyers who can then avoid paying duties and taxes.

So ordinary quotas – those that exempt taxes and duties on Nu 800,000 of a vehicle’s cost – were selling for about Nu 45,000 before the government’s announcement. Today, they already cost Nu 100,000.

The price for “Prado quotas” – those that exempt all taxes and duties for Toyota Prados – has also doubled. They are only a few of them left, and they were selling for Nu 200,000 until the day before yesterday. Today’s price is a whopping Nu 400,000!

The allotment of foreign vehicles to senior public servants costs the exchequer dearly. But worse still, it causes rampant corruption. So it should be discontinued. And in its place, monetized entitlements should be provided.

Improve public transport. And discontinue quotas. Only then, will the government be able to control the growing number of vehicles.

 

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  1. y Thinly says:

    I find lots of contradiction in the way govt. has come up with increase in tax for cars. The justification the govt. has given is ridiculous.
    The simplest step the govt. could have taken is impose tax on all cars (may be tax for polluting environment by way of GREEN TAX which should be based on cc/ cylinder vol. capacity of cars). By this system, all people who own car will be made eaqually responsible (pollution pay principle). The new method proposed by govt. to curb number of cars is next to impossible.
    This system is biased, in the sense, it is meant to victimise the lower income people. It is only going to affect lower income people. Richer people will not be affected as most of them have already bought enough of luxury cars (all MPs have foreign cars).
    If the govt. really want to apply their’phillosophy of Equity and Justice’….they should recosider their decision to impose tax on cars bought after 17th June…….
    I am sorry to say that….almost all the decision taken,as on date, by this govt. is biased (personal view). I feel that decisions are some way or the other linked with their personal interest.May be not, but thats how I feel and find.
    I also disagree with Hon’ble OL’s view to discontinue Quota system. Why do we create differences between younger and older generations?..Older generations have alreadi enjoyed so called quota system and now why do we have to stop for younger generations. My contention here is that even if he/she sells his/her quota, I dont think he that quota can buy more than one car…..with that quota, buyer can get one car…..therefore, your arguement that “to curb number of cars, quota system should be done away with” is not convincing. Thus, I strongly disagree with your statement.

  2. Practising GNH says:

    Yes, yes, yes. In Bhutan there are abnormal practices and systems. First of all, people who buy the first car should be given tax exemption and same should be applied for all forms like tax for sand, stone and wood for construction. The second, third and fourth should be taxed more. There is no need to have pool vehicles, no need waste so much money that must go to the poor people by buying land cruisers, prados and hiluxes. At the most people must be given the fuel allowance. Fuel allowance must be based on the travel distance. No need to give huge amounts to some and little to others. I think all use petrol and diesel, no one uses liquid gold in their vehicles. The salary gap must be reduced not widened. A security guard, driver and peon who earn about Nu. 5000 eat the same rice and meat bought in the shops in the town. Where are GNH and human values that we preach? There is discrimination everywhere and in everything and all must be removed one my one. Some are exempted from taxes, others pay no house rents, have vehicles.. The only ones who suffer are those in the lower levels. All must be equal..Bhutan is a LDC and how come there are so many Lancruisers? Where are the money received from donors going? Construct houses, provide education, drinking water, etc.. to all. No need to waste public money to buy expensive vehicles. Everyone, including OL must show the humble and simple way of living. Let us show the way to live a simple life… not just talk and talk.

  3. Dorji Drolo says:

    I see nothing wrong in increasing the tax (customs & sales) for cars in Bhutan as it will surely have some impact in bringing down the traffic congestion and pollution level which is increasing at a very high rate in Bhutan especially Thimphu. Yes, I also agree that the government should in tandem try to improve the public transport system which at the moment is far below standard. The government should also do away with the quota system as most of the quotas are actually sold in the market which is illegal. I also agree with OL that government should think of alternative means instead of providing the officials with expensive foreign cars which is costly both to purchase and more so to maintain. By doing so, the government can save millions of Ngultrum because most of this expensive cars are misused for personal work which every body knows. Instead, financial incentives like the ones given to MPs might be much more appropriate as then the question of misuse doesn’t arise as there is then the ownership. The government should instead buy smaller and cheap cars as pool vehicles to run within Thimphu and Paro, and for the long trips, the government should hire from private agencies. This will also help to build our private business and at the same time control the misuse of the expensive government vehicles.

  4. Hopeless says:

    Increasing taxes is a short term solution to a long term problem.

    If traffic congestion is a problem, why isn’t government planning the extension of roads; if government is concerned with pollution, why don’t they provide subsidies/tax exemptions for purchasing electric cars/hybrids. I think there are many options than just increasing tax.

    any ways, increasing tax on cars doesn’t bother me, BUT GOVERNMENT’S INABILITY TO CONTROL AND REGULATE RENT REALLY DOES….

  5. Hopeless says:

    sorry, i mean “HOUSE RENT”…..in the last line

  6. Practising GNH says:

    If people in the villages can walk for days I think same can be done by people in the town. The distances are also shorter. It will save fuel costs, save environment, promote good health and so on. I agree with the idea of Agriculture Lyonpo. However, for those coming from far places, there must be public transport. The vehicles must be comfortable, with slightly body shorter than the present Mini Buses with convenient ticketing system and multi pick up and drop off points. The public transports also must stop along the periphery of the town like Chorten area, Vegetable Market area so that in the centre of the city people can walk freely. Those who need to transport their shopping goods can be arranged with scheduled timings. No pool vehicles required and just keep few cheap vehicles for diplomats. Provide fuel allowances whether people have vehicles or not. Those who do not have use taxis to travel. They cannot walk long distances or fly. The present mileage system is also full of loop holes. Just give lumpsum amount based on distance. No need to pay based on the kilometer and time of departure and arrival. Only the clever ones make lot of money. They manipulate the distance and time. It will be shocking to find that people sometimes take 10 hours to reach Thimphu from places like Wangdue, Punakha and Paro. At this rate people can even walk or travel on horses. Some even claim pony charges in places where you cannot find a horse. There are many surprising stories which I believe people in RRA and ACC know very well. The only sad part is that may be the same poeple also claim for themselves. There must be tax exemption for greener vehicles, if any. Public transport operators must be exempted from taxes. RSTA must look at improving the standards, maintain computerised vehicle movement information system to monitor accidents, travel time, convenience, fair and provide traffic and safety information to the public. The Police should improve their vehicle entry system from manual, slow, inconvenient system to fast system by using computers and bar code number reading system at the gates. There is no use writing with pens on small pieces of paper if the information is not used. The information must be analysed for decision-making and planning purposes. It is the time of IT and we must move with others. Such system will also reduce the requirement of the Police personnel.

  7. If the government is serious about: 1. Equity and Justice, and 2. Zero Tolerance to Corruption, they should put an end to the prevailing “quota vehicle allotment system” which benefits only the privileged few and promotes corruption.

  8. Thinlay says:

    My argument is that problem with vehicle population is because of availability of loan scheme. If government can think of increasing interest on vehicle loan people will think twice before buying vehicle.

    The problem of pollution is more from poorly designed fuel inefficient Indian vehicles. In the proposed plan, Indian made vehicles are exempted from tax increase. Is proper analysis/stduy done before proposing tax increase??? Infact, indian trucks and taxis are causing more pollution than well designed foreign vehicles.

    OL argument that quota system should be done away is being selffish. How many civil servants are there eligible for quota?? And the quota is available only after seven years of first allotment. I think most civil servants sell quota to earn some cash to pay for increasing living conditions. They simply do not have money to buy vehicles.

    By the way, i do not own any vehicle, and i will not mind even if tax on vehicle is increased. But the decision should be thought through to have any significant impact in reducing vehicle number or increasing government revenue.

    Cheers

  9. yeswecan says:

    I feel that idea of increasing tax on the purchase of new vehicle is very ridiculous with the reason to reduce pollution and ease traffic congestion. If we really count the number of vehicles per head in Bhutan, I think it is fairly in balance. Talking about pollution, it is a global phenomenon which can only be controlled by bigger industry intensive countries. I don’t think the cars in Bhutan can produce significant amount to pollute the nature.
    I agree with OL in saying that we really need to find the real solution such as improving the public transport system, transport infrastructure, which is almost non-existent or very basic in almost every part of Bhutan. We still don’t have a good traffic system where pedestrians can walk safely, bicycle paths are non-existent and car parking is another chronic issue. Even government can encourage private sector people to build multistory buildings as car parking (I think it will generate better income for building owners) to solve such problem, if they can’t build one. The ultimate goal of stopping people from buying cars is more or less an invasion on privilege and rights of the people to own what want.

  10. guardian says:

    Dear OL,

    Agree with you fully that the vehicle quotas for senior civil servants should be done away with immediate effect. Bhutan has come a long way from when such a privilege was relevant.

  11. Thinlay says:

    OL; Sorry i overlooked your suggestion of monetized entitlement. But then, how to do it is a big question. Could it be like Nu.800,000 for each civil servants eligible for vehicle quota?

    The only substantial entitlement for Civil servants in senior grade is a vehicle quota. I feel that suggestion to scrape this entitlement will demoralized senior civil servants.

    If there is evidence of corruption in vehicle quota allotment, then there is rational in OL suggestion of monetized entitlement.

    Cheers

  12. Give cash in place of the foreign vehicle import permit to eligible civil servants every seven years! No need to worry about corruption! It will then be up to the civil servants to do whatever they want with the cash, and will save millions by way of tax money from the mostly private buyers of foreign cars who end up using the “quotas” of the civil servants!

    I have just recently sold mine – Only hitch being that I didn’t see this tax raise coming (there weren’t any speculations on that recently), and therefore some rich private bugger have struck gold! But then this is our system!

  13. guardian says:

    Just do away with the vehicle import quotas and cash rewards to civil servants, for what, most of them are corrupt anyway!

    Make it a level playground for everyone!

  14. gungtala says:

    Does it matter that the senior civil servant is selling his/her vehicle quota? It is given so that he/she can buy a car tax exempt, so in a sense its just one car for one quota regardless of who buys it. Those who got the quota got it because they made it to the level that they deserve, so sooner or later people below will also get it when they reach that level. Talking of pollution, cars in bhutan are least of polluters and there are many trees to feed and trees feed on CO2. If traffic is a problem, get on it and solve it. People in the govt. are paid to do that. Make roads, footpaths, public transport. Dont just blame the very public buying cars for whom the govt. shud be working. Its called development and people will try tooth and nail to make their lives comfortable.

  15. neewang says:

    sorry la, i think puting more tax on vehicle does not make good sence,as the rich people and high offical can bring lots of used vehicle with CD number in the country and getting here they can change number.only the poor income people will suffer.that do not apply GNH for bhutanese citizen.

  16. This is another band-aid and thoughtless solution.

    If we are so worried about the environment, why not levy taxes on all the vehicles, no matter what country they are buying from. It does not make sense for Bhutan to impose higher tax on vechiles imported from countries other than India. Bhutan has nothing to gain, unless Bhutan is being bribed by Indian car companies. India does tax on foreign imports, simply because they want to protect domestic car manafacturers. What does Bhutan have to protect? Bhutan does not manufacture its own cars. So why not have uniform tax on all cars. I bet Toyota makes more environmentally friendly cars than Indian manafacturers. Japanese cars are really popular in westestern societies because they make fuel efficient and longer lasting cars. I wonder why Bhutan government is discouraging Bhutanese to buy such cars.
    The increasing tax on imported vechicles is only going to make people with vechile quota even more richer. Now, since the tax is high, vechicle quota can easily be sold for more than before. I wonder why the rich deserves the quota. Is this law passed, so that they can make more money. Instead of jailing smoke vendors, why not jail quota abusers. It is breaking the law, so to speak.
    If the goverment is really converned about environmal damage, then stop importing expensive SUVs for goverment vehicles. Make hybrid car tax free.
    Another thing that bothers me is we do not have freedom to buy vehicles from whichever dealer we choose. Why are we giving monopoly to certain dealers to sell vehicles in Bhutan. I think as long as it is your money, the goverment should butt out from where people spend their money.

  17. Oh, other thing I forgot to point out is, basically the message is, you have the right to pollute the environment,only if you are rich. If you are poor, you don’t have that right.

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