The Bhutanese Leading the way.
While the passing of the motion to table the Pay Structure Reform Act of Bhutan 2022 for Amendment saw a lot of debate around its legality, and some minor issues for civil servants and diplomats, the real meat and intent of the Bill was missed by all.
In the last session on 1st July 2024 the Chairperson of the House Committee and Deputy Speaker, Sangay Khandu, withdrew the motion to amend the Pay Structure Reform Act 2022, stating that the government is already taking steps to address the issue.
The main issue last time around, and even this time around, is the removal of the lucrative Prado quotas for MPs by the Pay Structure Reform Act 2022, and their fierce struggle to get a duty car and driver equivalent to a Government Secretary or an enhance lump sum amount of Nu 2.5 million (mn) to buy the vehicles instead of the current Nu 1 mn.
However, it would have been political suicide for the ruling and opposition MPs to frame the motion this way, and so, even minor issues of civil servants and diplomats were picked up and put in the motion to justify it as a larger good.
A senior official in the government, on the condition of anonymity, pointed out that from day one, the new MPs were not happy with the fact that they would neither get vehicle quotas or duty vehicles, but only Nu 1 mn and driver and fuel allowance.
Section 63 (1) of the Pay Structure Reform Act 2022 says, “The issuance of new vehicle quota shall be discontinued with effect from the 1 July 2023.” If MPs can remove this provision, then it will not only apply to civil servants but to them as well.
In the past, MPs would mainly sell their quota for around Nu 1.5 mn or more, but the quota value now is much higher. In 2019 a MP Prado quota could save a person Nu 3.8 mn in taxes per Prado, but now, the same quota can save Nu 6.1 mn to Nu 7.7 mn per Prado depending on the type of Prado. The quota should be worth double now compared to 2019.
On 5th February 2024, the National Assembly (NA) MPs had their first plenary session, and one of the outcomes of the session was a 14th February 2024 letter signed by the Speaker asking for 2,800cc designated vehicles for MPs, as per the Pay Structure Reform Act 2022.
The letter was addressed to the Prime Minister’s Office. The reason given was that Nu 1 mn is not enough to buy a duty vehicle. Then different provisions of the Act were cited.
At the time, the NA MPs declined to take the Nu 1mn lump sum amount that their NC colleagues had already taken.
The Finance Ministry, however, made clear, its inability to provide such vehicles as no new vehicles were being bought.
This was followed up by a second letter to the PMO from the NA House Committee again signed by the Speaker which asked for the lump sum amount to be enhanced to Nu 2.5 mn from the current Nu 1 mn.
The letter said, “The House Committee of the National Assembly has thus decided and proposes an amount of Nu 2.5 mn.”
The letter says the amount will enable the MPs to buy duty vehicles with their vehicle quota being discontinued.
With the Finance Ministry not budging and insisting that only a Pay Commission can make changes in benefits, the MPs decided to escalate the matter.
On 21st May 2024 a Press Release by NA said that one of the motions expected during the upcoming NA session is ‘Inconsistency between the Practice and the Intent of the Pay Structure Reform Act 2022.’
Hidden behind the innocuous title was growing resentment among new NA MPs who felt that while the Act took away their ‘Prado Quota’ in 2022 with the assurance of rationalizing government vehicles into a common pool, the Government Secretaries and other senior officials still have designated vehicles.
In an earlier interview, the Deputy Speaker, Sangay Khandu, said it is not just about the vehicles but other issues in the Act, as listed in the current motion which was passed.
After withdrawing the motion in July 2024, it is now clear that the MPs have decided not to wait for the government to resolve the issue, given the position of the Finance Ministry, and they want to take matters in their own hands.
This tension was palpable with the majority of MPs supporting the motion along with indirect support from even a couple of ministers, while the Finance Minister Lekey Dorji cut a lone figure opposing the motion saying that the motion is not in line with the Constitution as Article 30 section 2 gives the right to make changes in pay structure, allowances, benefits and other emoluments only to the Pay Commission. For added effect, he said the OAG said the motion is not legal, and that views may even need to be sought from the Judiciary.
The legalese language did not have any impact on the MPs with 32 Yes votes, 7 Abstention votes and 2 No votes of the 41 MPs present and voting.
The Deputy Speaker, Sangay Khandu, who was presiding over the session said the government should look at the legality, and if it is an issue of legality, then laws can be amended, but if it is unconstitutional then the NA would have to accept the judicial interpretation.
One of the main points in the motion is on removal of vehicle and duty-free quota entitlements. It says, “With the shortage of efficient public transport, vehicles have become a necessity for all. But, with the enactment of the pay structure reform act, both the Vehicle and Duty-Free Quota, which were once recognized by civil servants as a reward and recognition for their dedicated services were eliminated. This could possibly delay delivery of services and also demotivate the civil servants.”
The government official said that vehicle quotas were removed for Civil Servants and MPs in the Pay Structure Reform Act 2022 as part of the larger Civil Service Reform, and also the Clean Wage Reform where there would be no hidden and perverse incentives.
The officials said that civil servants were selling their quotas for money when that was not the purpose, and such things were counterproductive.
A 2012 task force on Rupee Shortage recommended the abolishing of the vehicle quota because they found there was double imports with every quota. Double import occurs as the quota buyer purchases a third country imported vehicle of a higher capacity, and the civil servant uses the profit from selling his or her quota to purchase a smaller vehicle along with a bank loan. This impacted the foreign exchange reserves and led to more fuel imports.
The total number of vehicles imported under the quota scheme from 2002 to 2011 was 3,121 vehicles worth Nu 2.596 billion.
The rupee shortage task force also found that from 2002-2011, the government lost Nu 900 mn in potential revenue due to the civil servants’ vehicle quota
Other issues
On the issue of prorated annual leave encashment and 21 days holiday, the source said there was a big debate in the Pay Commission on the issue, and it was decided to give the leave money, not to cause a loss to civil servants, but at the same time, give them 21 days leave for their own benefit so they can spend time with their family and community.
The source said that the only issue was it was a bad timing, as it coincided with a huge civil service attrition, and so, service delivery did get hit in some sensitive positions. Here, the official said there are also civil servants who have not availed of the leave, out of concern for the country’s current state.
On reduced DSA to 20% for officials accompanying ministers and their equivalents, the official said in such trips, the government is already covering food and boarding, and so it makes no sense to give full DSA. The official said the purpose of the DSA is not income, but to cover food and board.
On civil servants above S-5 not getting overtime payment, the official said that those at and below S-5, like drivers, do not have an option but to drive at off hours, etc., but for officers, they do not have to mandatorily work during off hours, as they have office hours to complete their work.
The official said overtime payment for civil servants will be a perverse incentive, as people can choose not to work during office hours, and keep work for later only to get overtime payment.
The official said the communication allowance was only for senior officials at Director level and above, and it was cancelled by the last Parliament since everybody is communicating, and not just higher officials.
On the container allowance no longer being there for diplomats, the official said this was being misused to bring in even commercial goods that should have been taxed or shopping lists of others.
The official pointed out that the motion of the NA is the Legislature now putting its hands into the area of the Executive.
The Economic and Finance Committee (EFC) had proposed a motion urging the government to present the Pay Structure Reform Act of Bhutan 2022, along with other related Acts, such as the Civil Service Reform Act 2022, for a thorough Review and Amendment the Summer Session in 2025.
Deputy Speaker, Sangay Khandu, highlighted the government’s responsibility in ensuring legal processes are followed regarding the Pay Commission. He stated, “The government’s duty is to ensure it is done legally. The Parliament cannot institute the Pay Commission; it is the Prime Minister’s responsibility to call for and initiate it. If the government can address the issue without forming a Pay Commission, then it should proceed that way. How this aligns with the Constitution is up to the government. Our role is to recommend and amend as necessary.”
The Deputy Speaker also told the paper that the OAG is not the final authority on interpreting the Constitution. He clarified that while the OAG can point out potential violations, any constitutional interpretation must be sought from the Supreme Court.
