Taxing job

How not to raise taxes

Breaking News! Opposition Leader calls for Finance Minister’s resignation!

Actually, that’s yesterday’s news. That’s when the opposition leader called for the finance minister’s resignation, during the budget discussions in the National Assembly.

But, for some reason or the other, the news has still not reached the media. Bhutan Today, Kuensel, BBS and all the radio stations have been remarkably silent on the opposition leader’s demand.

The media may be uninterested. But you, I’m quite sure, want to know why I proposed such an audacious measure. Here’s the story.

Chapter 5 of the 2010-2011 National Budget is about the tax reforms and incentives that the government recently announced. When introducing it, the finance minister informed the National Assembly that the tax reforms – rationalization of sales tax and customs duty rates, and broadening the tax base – would “strengthen the government’s revenue base”. And that the fiscal incentives would “stimulate private sector growth and attract new investments.”

There’s no doubt that that would be the case. Except that I haven’t yet seen the details. The finance minister’s report was only an overview, and we, members of parliament, were not told which taxes were revised by how much. Like you, I also happen to know the increases in sales tax and customs duty for vehicles. But that’s only because the finance ministry is already implementing it!

The finance minister informed the National Assembly that the tax reforms and fiscal incentives have already been approved by the government. He explained that the government’s authority to approve the tax reforms comes from Part I, Chapter 3, Section 4.2 of the Sales Tax, Customs and Excise Act 2000 which states that:

The fixation of the rates of Sales Tax and any revision thereof … shall be approved by the Royal Government of Bhutan.

And Part II, Chapter 4, Section 6.1:

Customs Tariff and revisions thereof, shall be approved by the Royal Government of Bhutan.

Very good.

Except that the finance minister ignored the Public Finance Act 2007, Chapter III, Section 9 of which says that:

Raising of revenues through taxes shall be authorized by the Parliament.

And Chapter III, Section 14(b):

The Minister of Finance shall be responsible, inter alia, for: proposing taxation measures to the Parliament …

He also ignored that the government’s authority to approve taxes and customs duties according to the Sales Tax, Customs and Excise Act 2000 were repealed by the Public Finance Act, Chapter I Section 2 which states that the Act shall:

Supersede all laws, regulations, rules and notifications that are inconsistent with the provision of this Act …

But that’s not all. Important provisions of the Constitution were also blatantly overlooked. The government’s “tax reforms and fiscal incentives” should have been submitted to the National Assembly first, as according to Article 13.2:

Money Bills and financial bills shall originate only in the National Assembly …

According to Article 14.1 of the Constitution the Parliament’s approval is required to change the tax structure:

Taxes, fees and other forms of levies shall to be imposed or altered except by law.

And, Article 14.9 of the Constitution reinforces the National Assembly’s authority to approve taxes as government revenue:

Where the budget has not been approved by the National Assembly before the beginning of the fiscal year … Revenues shall be collected … in accordance with the law in force at the end of the preceding year …

Furthermore, the Constitution ensures that the government’s authority to approve taxes and customs duties according to the Sales Tax, Customs and Excise Act 2000 is repealed. Article 1.10:

… the provisions of any law, whether made before or after the coming into force of this Constitution, which are inconsistent with the Constitution, shall be null and void.

Taxes are important. They are the government’s principle means of generating revenue. But taxes are also dangerous. They can be misused to achieve corrupt or political ends. That’s why the laws of the land have checks and balances, and demands transparency whenever the government wishes to impose or revise taxes.

But that wasn’t the case. The finance minister ignored the Constitution and the Public Finance Act. And he bypassed the National Assembly.

That’s why I called for the resignation of the minister of finance.

Photo credit: Business Bhutan

UPDATE ( 30 June, 9:30 PM): I’ve just learned that BBS TV carried this story today.

UPDATE (1 July, 00:24): My apologies to Kuensel. They did run the story.


Facebook Comments:


  1. Dinesh Pradhan says

    Lyonpo la..the news did make it to Kuensel and you have been quoted.
    Here’s the link from kuenselonline:

  2. Dorji Dholo says

    Going through the very detailed explanation of the Acts & Constitution made by OL, I too feel Finance Minister made a blunder which will cost him for resignation. If it were in any other country, the resignation of FM is for sure.

  3. Lyonpo OL, you made a BIG MISTAKE!!!

    In any democratic nation states well-governed by law, it would be the Prime Minister — not the Finance Minister — who is expected to resign in such a circumstance!

    The entire cabinet would also resign.

    New leader of the governing party would have to be elected, and new cabinet appointed.

  4. yeswecan says

    I appreciate honorable OL for the excellent challenge. Other MP’s should learn and talk more of substance. I like our OL to debate like David Cameron when he was leader of opposition in British parliament. See the link below

  5. KUDOS to OL…not only the FM but also the cabinet minsters should resign……vacate the place for others…

  6. OL congratulations!!! i admire your courage and the research you have carried out. Its really sad that there are only two people in the opposition…you guys are always bulldozed.

  7. Yeah, i agree 100% with OL that finance ministry seems to have overlooked the act. But i am wondering whether it would be wise to make him resign or not…Had it been elsewhere, i am sure he will be made to resign but here i am doubtful whether there will be any better replacement…DPT lacks pool of talented people to shoulder such responsibilities….

  8. Bullchakpa says

    The proposed tax reforms are not a half baked decision of the government but based on the meticulous research and expert opinions of our finance offcicials. Therefore, for all of you PDP fanatics to call on the FM’s resignation based on a well-intented proposal is way out of order and far-fetched. Just because the tax will affect few of your rich supporters does not mean that the average Bhutanese will stand behind you. All the same, enjoy the excitement!

  9. I think it is the duty of the OL to point out any matter that is so serious in nature to the ruling govt. especially if it infringes the constitution. For that, I congratulate him.
    Having said this, I also agree with some of the comments that in our context it may be impractical to call for the resignation of the FM as this could create a vacuum that the nation may have to pay dearly for. In any case, in a parliament where the opposition is totally dominated by the ruling govt. I daresay, it would be an exercise in futility.
    The positive side of this is that we hope that the govt. will be a lot more careful when they frame policies in the future.And that the public will also be more conscious of not putting all their eggs in one basket.

  10. Bullchakpa, it is high time you got over this PDP and DPT thing, this is being very kiddish. Don’t torture yourself with imaginations and thoughts. Now we are Bhutanese and should bring the interest of the nation together. Instead try to be more inclusive in the development of the nation rather than being necessary exclusive and party oriented. You are destroying yourself.
    Just remember, “united we stand, divided we fall” the choice is yourself. The two oppositions in the NA are doing a marvelous job and needs to be applauded because they are doing what they are supposed to be doing with much research and evidence. The other MPs need to do the same. No offence to you but.

  11. I am neither a DPT not a PDP fan, but I will support law that makes sense.
    I supported and went against OL with the open tourism policy, but DPT bolted under pressure from big tour companies and scraped the plan.
    I am also against OL for awarding contract to Drukair, because they have proven to be incompetent monopolistic protected company.

    As for the new taxes, first of all, the tax is going to affect poor people more, because all the newer taxes being proposed are on basic necessities, not luxury goods.
    The new taxes are on water and electricity, which are two of the basic human needs. Tell me how is that going to affect rich more than poor?

    Point number two, when you tax big companies, the cost is eventually borne by consumers. For example, if you tax big banks a lot, they will increase their service fees, if you tax cable companies more, they will pass it along to the consumers. So matter what, the eventual burden is passed to poor people.

  12. I wish His Majesty commands a judicial review on this. And yes, an opinion poll on DPT government!

  13. The issue is not whether the tax is good or bad. The bigger issue is that the DPT government is blatently ignoring the laws of the land including the constitution. Since the tax hikes are illegal, shouldn’t OL be calling for the repeal of all excutive orders issued by the Ministry of finance for the implementation of raised taxes? Call a press release and let the public know why the PM and the cabinet should resign. That is the way to go.

  14. I really dont know if this required the FM to resign as you suggested. This could have been a genuine oversight, and to “err is human”. Unless you can proof there was an intentional motive behind this move, you cannot demand the resignation of the FM. As you see, the Finance Ministry does refer to the Sales Tax wherein it did give authority to the Government to approve such taxes. And if you feel otherwise, then like someone suggested, why only FM…the whole Cabinet, all eminent ppl on that Board.

    On the whole, i would like to salute you for the good job done, keep them on their toes…always and only the two Opposition can do it in this NA.Number doesnt matter, quality does and I must say both of you have it. 3/4th of the ruling party members put together cannot measure upto the two of you.Kudos to Dasho Damche tooo

  15. kotadaza says

    Of course he should resign. It is not a simple erron like someone said – as a minister you have to have upper hands on at least the constitution and here the Finance minster has failed. His ignorance come across to me as deliberate.

    This tax will only effect the poor ones. I like the idea in principal because there are far too many cars in Bhutan. However, due to lack of public transport facilities car has now become nessicitiy. All rich people have more than one car anf therefore it doesn’t affect them. However, those who are getting on the ladder and have saved enough money for years to buy one is affected.

    Finance minister’s ignorance is a insult on Bhutanese intelligence. They take use for a ride and we let them do it. Stick ie what we need – far too many carrots in my view.

  16. Dear TT, you made a valid point. I applaud you for that. Resignation! I think is a hyperbole.

  17. My question–Are people in finance Ministry stupid enough to overlook the Fianance act 2007?? I think if some one from MoF does not explain to public about the basis and procedural lapses as pointed out then we may have to accept OL charge against the MoF. For time being, OL charge is simply a charge unless proven through proper discourse. MoF has to do some explantion to convince us whether what is written here by OL is fact or otherwise.


  18. I think the MOF has always been a closed Ministry, people really do not know what they are doing and then they come up with such tax revisions, which I don’t think is at all justified.

    This will never lower the gini-coefficient, besides as stated by the OL such revision should follow the law, which the Finance Ministry did not.

    Not only the Finance Minister, but the Secretary, the Directors and staff involved should resign or be made to resign. All Ministry of Finance officials involved have their hand in it. So they should resign. Their ignorance cannot hurt the people.

  19. Thinlay,

    If you leave it to the Finance Ministry, they will never accept their flaw and go on interpreting it in their favour. The best you can do is, check the clauses pointed out by the OL or either refer the Acts yourself and come to a conclusion and if you cannot get it, discuss or ask someone to explain.

  20. I am a bit surprised that this topic has generated some interest and people seem to be swayed by the justification of the OL. However, no matter how many times the OL calls for the resignation of the FM, or for that matter, any cabinet Minister, that would be just flogging a dead house, because it will never come to fruition. so, eventually, it’s a waste of time and tantamount to nothing valid than a rhetoric.

    OL used certain provision from the Constitution and the Public Accounts Act to justify his stance but that I think is just his interpretation which is not binding on anybody, let alone, the government. On the other hand the Finance Minister and the officials from the Ministry justified their action based on the same provisions of the law. Therefore, unless the law is interpreted by the judiciary, I don’t think any side is right or wrong.

    So, the OL’s call for FM’s resignation is nothing more than an ordinary political squabble.

  21. Let us all be aware that there are many contradictions in the Bhutanese Acts and Regulations. And almost all Acts say that it will supersede other Acts. The points raised by OL are true but are also a result of the unclear laws that we have. Every organisation is busy drafting laws and Acts and in the process we have many contradictions. I do not have time to prove you all in this forum examples of numerous other conflicting clauses. I do not know whether Finance Minister should resign but I surely feel that OL will improve the legal system if he joins the Judiciary, may be its too late although the post of High Court Chief Justice is still vacant. We need more legal experts more than ever before to make sure that all laws and Acts speak the same point.

  22. Sonam Tobgay says

    Dear All,
    this was a classic example of pulling the wool over the nation.

    When the Speaker requested Ugay Tshering to verify the points put forward by the OL, Ugay Tshering blatantly quoted the financial regulations ignoring the constitution, and with a straight face told the parliament, that all was in order, when he knew that, the new tax proposal had violated the constitution.

    I feel sorry for myself, being a citizen of this nation, we can elect members of parliament who can lie, not far from selling the nation.

    well done OL
    for evil to triumph, it only take a few good men to do nothing

  23. Let us accept the following premises:

    1. We must accept the fact that tax on luxuary items (including foreign made SUVs) is necessary as we can not depend forever on hand outs from donor agencies.

    2. We must accept the fact that tax on polluting items like high capacity vehicles is imperative as we want to save our environment and foreign exchange as it is one important principle of GNH.

    3. We must accept the fact that it is a responsibilities of MoF to study the taxation system case by case and put up in law making institution like NA for discussion and approval or rejection.

    4. We must also accept the procedural norms required for enactment of any bill in the NA

    Having said these, now OL charge that MoF overlooked the finance Act 2007 and implemented the unilateral decision on vehicle tax warrants some in-depth discussion; because in my opinion, no matter of national importance such as taxation should have easy passage or it should follow a proper course of action before it come into force. Now the ball is in the court of some individuals or group of individuals with law profession to study the Finance Act 2007 and interpret the provisions on taxation without fear or favour and bring it to next assembly to discuss the vehicle taxation. If mistake is made, be it procedural or in substance, but for the good cause, it should be understood positively, and make sure that such lapses is avoided in future.

  24. Thinlay,
    You are right about some things, yes we do need to tax luxury items like SUV but they should be uniformly taxed, why are they taxing more on vehicles produced by country other than India. Bhutan has no domestic car to protect. Countries like India do it to protect their domestic manufacturers.
    At the same time, giving quotas negates whatever tax hike on vehicles they are introducing. Let be honest here, majority of people who can afford land cruisers and hiluxes are people who have quotas or people who can buy quotas from others.

    Increasing taxes on water and electricity is unnecessary, especially the with the electricity. If you look at the proposed electricity rates, it is going to be higher than what we export to India for. These are basic needs and we should not put extra burden on people who already pay more than half of their earnings on rent.

    And yes OL has the right to call for anyone’s resignation. This is not the first time MOF had blatantly ignored the law. If anyone remembers, MOF did the same with salary revision last year. They proposed higher salary salary for higher civil servants and lower for lower civil servants. Later they blamed it on some kind of bullshit like typo.

  25. It should ready, higher % raise for higher pay and lower for lower pay.

  26. YES i read the article in the Kuensel too. What i don;t understand is how different people can read the constitution differently. Howcome, when the Speaker asked a MP to verify the act of raising taxes, he reported it was witnhin the constitution. either, there are tweeking the constitution all the time or they haven’t understood it well.. both are very bad situation for the country. the first one will encourage corruption and the second one is a disgrace to the MPS… and therefore disgrace of the Govt, and the country. my opinion is still that people will no background in terms of experience and qualitfication shouldn’t have been allowed in the first place to run just because to win an election.

    I think here’s a good lesson to learn.and i really hope for the sake of the country and the people, the Govt. realises it…

  27. Yea, I too strongly agree with FM resignation. it is sad part that there is only two members in opposition party actualy he should be send out from the post…….. he should know each and every details,good and bad because he was minister of Finance for twelve years.
    I think by now he is satisfied and ignorant by this behaviour.
    I think other young MPs should think over it because whole life you all are not going to be in the same place.

  28. lINDA WANGMO says

    What about the tax for the house owners… shouldn’t they pay tax or are most of the houses owned by the big shots and even if they need to pay taxes they would charge the tenants but still some money would be going to the government revenue. The MPS and the Lynpos have their share of quota and they dont care the taxes for their car.

  29. very bold demand from OL, thumbs up for that.

  30. Keep it up Hon.Mr.OL. Yes the Govt. must follow the Law. We understand that people will make hue and cry over the increase in Tax, No Doubt…But we want the govt. to do their job as per law and transparently i.e through the Parliament.

    I am worried abt. my dzongkhag’s representative (MP), seems they follow what the Govt. is doing. Please make your presence and don’t be a puppet.
    Congratulation Mr. OL.

  31. gungtala says

    Now that the OL has demanded for FM’s resignation, NOW WHAT?

  32. DPT is blatently ignoring the rule of law. Raising taxes, lowering taxes is the fiscal policy prerogative of the ruling party, but they can’t bully their way through without following the procedures – first have the concurrence of the Parliament. DPT has bulldozed through CDG and banned live media coverage, and now they have raised taxes without even discussing in the parliament. Let us forget pubic finance act 2007, let us forget customs, tariffs and sales tax act 2000, but the Constitution is very clear on the taxes requiring the emdorsement and approval of the parliament.

  33. Thank you Lyonpo OL. Feels good to see our Constitution at play. Now I understand what a Constitution really is, what it means and what it can do to safeguard the interest of our people and our small precious Kingdom.

  34. Great job OL la! FM should resign from his post immediately.

  35. I must applaud to the OL’s wise words. I felt that this was indeed the first time that the Opposition made a remarkable statement, which is indeed very much required for a healthy democracy.

    I am a young youth and I know how much the environment needs our attention. But at the same time I prefer reality over austerity. It is funny to know that our country can’t even afford to cope up with the little increasing traffic; We must have a look at Delhi and Kolkota. We have such a small population of vehicles and we can’t manage it and we dream of accomplishing GNH! I must ponder over it for hours I guess.

    No matter what, making Cycling as a form of transportation in Bhutan is a dream that has a long way to come true.

    For rich people, even if they aren’t able to buy a Prado one would surely buy a Santa Fe but for common people like us whose only dream is to buy a simple Atlo by investing savings of several years- buying a vehicle would just remain a dream.

    Like Keshav Bhandari said in his blog (, it makes a lot of sense to put in place huge taxes on grand vehicles but placing in tax for vehicles for common people makes no sense! Is this why we voted the present government??

    But it is sad to note that media and the government did not respond to this very seriously. I think it is important to notes the reactions of the present government for Future Elections!

    Anyways, OL please continue to do your best.

  36. just this once says

    i voted for DPT and i have no issues with Govt for what they are doing but this Taxing issue is criminal act disregarding the Finance Act and even Constitution.
    it is ridiculous to recall how our PM, Ministers and MPs put their heads under Constitution infront of media and His Majesty.

    for this violation, not only PM and cabinets but MPs should also resign for failing to obey constitution and buckling under cabinet pressure.

  37. Dorji Tshering P says

    OL, I was a DPT supporter but seeing how they have been operating in the last two years we need to get rid of them.

    Indeed Ap NAKA (PM) along with his cabinet must resign for not following the constitution.

    DPT has become a monster. It must be stopped and the wangdi norbu is the avatar of this monster.

  38. khamdangpa says

    well it seems more like a public debate.
    as somebody has rightly pointed out, unless the Judiciary take over the matter, it still is like an old adage which says ” Let the dogs bark, Caravan goes on”.

    It is the most remarkable statement you have ever made OL. Applauses for you. though a high school student i have always been a good observer of the Govt’s performance and your statements.

  39. Disciple says

    The challenge of OL is hugely appreciated. When such cases are raised in NA, there should be a automatic mechanism under the Supreme court to put a hold to all relevant executive decisions (tax raise in this case), until the alignment with constitution or relevant laws are undertaken. OL is not shouting just for the heck of it, and the issue should not be just brushed under the carpet. Let us play fair.


  1. […] that won’t do. I’ve already reported the matter in the National Assembly. And if the government refuses to review its decision, I may be […]

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