NC resolves not to accept hike until government’s revenue stream is clear

The National Council in a surprise move has decided to not accept the new pay hike applicable to MPs until the revenue sources to pay for these are finalized and implemented by the government.

This is line with the various recommendations of the National Council to the National Assembly on the pay hike which had all been rejected as only the NA has power over money Bills.

The National Council Chairperson, Dasho Sonam Kinga on his facebook status posted, “The National Council has decided to abide by our recommendations on the Pay Revision Report and defer our pay revision until measures for expenditure rationalization identified by the government are implemented and realized.”

Earlier one of the main recommendations of the NC on the NA’s pay hike Bill was to defer the payment to senior figures like the Prime Minister, Cabinet Ministers, Speaker, Opposition leader, NC Chairperson, MPs, Constitutional Post Holders, Privy Council, Attorney General, Chairman of the Royal Privy Council, Cabinet Secretary, Secretaries, senior Judges and other senior officials. The NC said this was until the revenue generation and cost-cutting measures identified by the government to finance the pay revision are implemented and realized considering that the country’s economy continues to face great difficulties.

According to sources, after the Parliament session closed the NC MPs met and had a long discussion on the issue after which the above decision was taken.

NC members had earlier already pointed out that though the pay commission report had identified some fiscal measures it would take some time to implement until which time such revenue would not be available. On the other hand the pay hike was being made applicable from 1st July 2014 when all the fiscal measures would not yet be in place.

The feeling now in the NC is that they would like to defer taking the pay hike until all the government’s fiscal measures are implemented and the actual revenue is realized.

The NC in its discussion on the pay hike was not entirely convinced with the government’s plans to pay for the hike from mainly future revenue sources.

The government’s pay revision report says that the pay revision is expected to be financed through cost cutting measures and additional revenue from identified sources like Chukha power tariff revision, additional PIT from salary increase, tax revenue from the change in vehicle quota system and other fiscal measures.

The pay commission report highlights this in more detail showing total ‘additional revenue’ of Nu 1.282 bn and Nu 700 mn in ‘expenditure savings’ in the 2014 to 2015 financial year.

Under additional revenue the pay commission calculates Nu 830 mn in additional revenue from Chukha project due to a revision coming in effect since 2013, Nu 376 mn as tax revenue from vehicle quota and Nu 76 mn as additional PIT Tax revenue.

The calculation does not include the huge potential tax revenue on account of the latest controversial Tax Bill that taxes vehicles from 100 percent to 180 percent and fuel at five percent.

In terms of expenditure saving the Pay Commission report talks of saving an additional Nu 409 mn from pool vehicles recurrent cost, Nu 184 mn from containing civil service growth at two percent per annum and Nu 107 mn for capping in-country travel at 15 percent of the wage bill.

The Prime Minister in his state of the nation report tried to assuage this concern. He said, “The salary increase will cost the government an additional Nu. 1.799 million per year. Some are worried but the government has already identified how to meet the costs.”

With the NC making its intentions clear the ball is now in the government’s court which in all probability will decide to go ahead and give the hike passed in the National Assembly. In such a case it is not yet clear as to what NC members can do or would do. They would have the option of getting the salary hike like the PM but not using the increased portion or the hike.

The NC’s recommendations

The NC in its deliberations came up with a nine page and 2,000 word resolution on the governments Pay Revision report submitted both to the NA and the government.

Apart from the recommendation on deferring the pay of senior politicians and officials which is now the main issue the NC also made several other recommendations on the pay report.

The resolution said that the pay of MPs should be Nu. 65,930 as decided by the government and not the higher Nu 75,160 approved by the NA. It says the revision for the Prime Minister, Cabinet Ministers, Speaker, Chairperson and Opposition Leader should be based on the basic pay of Nu. 65,930 for Members of Parliament.

However, the pay for Deputy Chairperson of National Council and Deputy Speaker of National Assembly should be 10-15% higher as provided for in the Parliamentary Entitlement Rules. The pay for Cabinet Ministers and equivalent positions and that of the Prime Minister should be higher by 50% and 100% respectively.

The NC recommended for the government to merge the pay allowance of 2010 to the basic pay, and that the 20% revision is based on that merged figure as recommended by the pay commission. It also said that the pay scale for GSP and ESP position levels be revised by the government after reviewing them

The NC resolved that the government pay 20% house rent allowance to public servants even if they are provided with designated housing, institutional housing and NHDC housing. If the applicable house rent based on carpet area of the house be either more or less than the eligible House Rent Allowance, the difference should either be paid for or retained by the public servants.

The NC resolved that every civil servant should be eligible for the revised mileage of Nu.16/ km irrespective of their position levels if they use their own vehicles.

The NC said that the government should review the decision to monetize the tax free vehicle quota and submit a report. It also resolved that the payment of additional Nu.300,000 for purchase of vehicles for MPs be deferred until the revenue generation and cost-cutting measures identified by the government are implemented and realized. It further resolved against the decision to provide the Nu 1 mn grant to ‘elected Ministers.’

The NC despite its resolutions in line with public opinion was taunted both by the Opposition and ruling party MPs as playing a game but benefitting in the end. The latest move by NC is meant to show it means business and also possibly safeguard the institution from the strong public opinion against the current hike.

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