Civil servants’ vehicle quota drains govt. coffers by Nu 900 mn from 2002-2011

The task force on rupee shortage recommends the vehicle quota for civil servants be done away with, ‘green tax’ of 40% be imposed on all imported vehicles, and five percent green tax on fuel imports

The task force to study the reasons behind the rupee shortage and suggest solutions was formed by the government on 12 January 2012. The report was submitted on 5 March 2012 to the cabinet.

One of the main higlights of the report is the co-relation between the import of vehicles and the rupee outflow. A reliable source talked to the paper on this aspect of the still secret report on the condition of anonymity.

 

Abolish Civil Service Vehicle Quota

“The rupee shortage task force has found that from 2002-2011 the government lost Nu 900 mn in potential revenue due to the civil servants vehicle quota,” said the source.

The total number of vehicles imported under the quota scheme from 2002 to 2011 was 3,121 vehicles worth Nu. 2.596 billion.

“The task force recommended the quota be abolished as it found that there is a relationship between the outflows of Rupee against the import of vehicles under the quota scheme,” he said.

“The task force report found that quota has a huge impact through fuel imports as well as in the form of double imports. 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,” he added.

This would affect both Bhutan’s convertible currency reserves and also its rupee reserves.

According to the Road Safety and Transport Authority (RSTA) ))data, there are as many as 1,206 Bhutanese individuals owning more than two vehicles in their names as of February, 2012.

 

40% car and five percent vehicle tax

The source also told this paper that the task force report had recommended a 40% green tax on all vehicle imports and a green tax of five percent be imposed on all fuel imports.

This information comes in the back drop of Lyonpo Wangdi Norbu and Lyonpo Yeshey Zimba announcing that the government will be imposing taxes on vehicles without specifying the exact amount.

“The task force report found that five percent vehicle tax increase especially on Indian vehicles had little impact on the import of vehicles,” said the source.

He said that in 2011, of the 6,893 vehicles imported from India, 4,254 vehicles (61%) were imported after the tax revision of 20 June, 2011. Though many of the vehicles were ordered before the new tax rates became effective, there were reasons to suggest that based on the past 6 months’ assessment, the tax revision had little impact on the import of vehicles.

The task force said that import duty and sales tax in Bhutan for vehicle imports  are the lowest in the region.

“Since vehicle imports are a large component of Bhutan’s imports with corresponding increase in fuel consumption and Rupee outflows, the task force recommended that the Government consider imposing a 40% green tax on all vehicle imports,” said the source.

“The report however recommended that this should be implemented simultaneously with the abolition of the tax-free vehicle quota system,” he said.

It has also been recommended that vehicles should not be allowed to be given for sports tournaments and other promotional activities.

“The task force report also recommends that heavy earth-moving equipment be imposed with custom duty and sales tax,” he said.

The task force has recommended a five percent green tax on fuel imports equivalent to the current sales tax as it was one of the top ten imports and caused a significant rupee outflow.

“The report has also asked the government to review the pool vehicle system in line with the recommendations of the Committee of Secretaries,” said the source.

The Finance Minister Lyonpo Wangdi Norbu announced this month that the government is significantly cutting down on the purchase of new government vehicles.

 

Total Import of fuel and vehicles

The task force found that the total value of vehicle imports from 2002 to 2011 was Rs 7.90 billion in rupee outflow for Indian cars and another 110 million dollars (Nu 5bn) for third country imported vehicles. Of the total vehicle imports during 2002-2011, 83.4% were from India.

The total number of vehicles imported from India was 1,103 (Nu. 309.83 million) in 2002, which has increased to 6,893 (Nu. 3.6 billion) in 2011. “The report says that the high volume of vehicle imports from India was driven by easy access to credit and lower tax,” said the source.

Credit for transport loans have also grown steadily. It was 1.3 bn in 2008, 1.7 bn in 2009, 3.1 bn in 2010, and 4.3bn in 2011.

The import of fuel (petrol and diesel) increased from 42.76 million liters (Rs 720.89 million) in 2002 to 111 million liters (Rs 4.25 billion) in 2011 becoming one of the top ten imports from India. From 2002 to 2011, Rs 21.84 bn was spent on the import of fuel.

The task force found that import of heavy earth-moving equipment (excavators, bulldozers, angle-dozers, etc) had increased from four in 2002 to 331 in 2011 mainly in the construction sector. During 2011, such imports from India resulted in an outflow of Rs 1.38 billion. The total number of heavy earth-moving equipment imported from India during 2002-2011 was 598 and the Rupee outflow during this period was about Rs 1.7 billion. In addition to this, another 924 heavy earth-moving vehicles were imported from third countries using dollar reserves.

About Ugyen Dorji

33 comments

  1. I have to agree on the burden caused by the quota to the govt, but wait a second, n let us analyze the matter closely. Are we sure, this is the right way to go.
    I feel it is wrong to do so. why?
     1. How many people in a year enter grade 6 or p3.? I’m pretty sure it’s not more than 20. So will 20 vehicle harm the govt. to that extend. I doubt it i really doubt it. If Govt still feels it is better that way, I think it would be a big discouragement to our civil society.
    2.It is a gesture from govt’s side of thanking our civil society for working so hard and bring prosperity to our country n people at large. Up to now at least.
    Because by the time people reach grade 6 many many of our civil servants are at least in their late 30s or early 40s. After serving govt for many yrs, it would not be unfair if given a quota.
    If the govt feels it is too much for govt to provide, then device sth else to keep our civil society motivated. because they are the ultimate back bone of our country, politicians will come n go like a bunch of wolves n jackals ( swiping everything on their way, making the most of 5 yrs) but our civil society will remain life time.
    We really need to rethink our policy of abolishing this quota system.
    Instead, make proper regulation so that it is not misused by people. I feel that would be more appropriate measure at this point of time.

  2. I second above comment. Vehicle quota is the only incentive given to civil servants after serving more than 15-20 years. I request government to rethink on this issue but tighten the rule. Civil servant availing such service must not misuse the incentive. I have been serving more than 25 years and to date i could not afford vehicle. This year i am trying hard to avail the quota, but it coincided with bad economy times we are facing. I hope to buy one this year but if government decides to abolish quota, may be it is my bad luck.

    Cheers  

  3. I feel this is a classic case of civil servants being treated as 1st class citizen and the rest of us being 2nd class. This totally goes against DPT’s Equity and Justice slogan. How is it that those who get
    1. guaranteed job for life
    2. a good salary,
    3. tons of foreign travel and over
    4. Tax free cars

    Now we know they have caused Nu 900 million loss to our nation. It is time all the citizens are treated as equal in our GNH nation. We must stop the creation of 1st class and 2nd class citizens.

    If the govt is going to increase the tax further than we must ensure that this quota back door is closed and all citizens are expected to pay equal tax. if the DPT govt does not do this then our PM is hypocrite and should not be talking about equity and justice.

    I am speechless how our civil servants are shameless parasites sucking the life out of our nation, and they have the audacity to say they serve the TSA WA SUM? And our political leaders have no will to correct this historical injustice to all the citizens of this country.

  4. Why can’t people look at the problem from a solution point of view, instead of adding another problem to an already exiting problem. Banning vehicle quota is not the solution for rupee crises. Putting in place proper public transport system is the best solution in the long run.

    Before blaming the small Alto’s, Maruti’s and Santro’s (that hardly burn 15 litres of fuel per day) look at those mammoth excavators and trucks that burn huge amount of fuel every day….has any one done a research to find out who is the bigger polluter, light vehicle or heavy vehicles in Bhutan?

  5. It is govt only who is wasting money and blames pvt sectors for ruppee drain,,, the ministers only buy all trippers, trucks, dozers, etc, construct 5-star hotels,,,, avail duty free shop wine and liquors, free vehicle quotas, trainings/seminars/meetings abroad and blames pvt sectors for this situation… I think, we should concentrate on limit on importing not food but other essentials like petrol, kerosene, etc…. encourage more indian tourists if 1 indian tourists spends 10,000 nu for his entire trip to bhutan and 20,000 tourists comes every where to bhutan, then we will get 200 million ruppee this is not including druk air tickets.. there are so many things govt can do to solve this ruppee problem,, just that they dont use their thick heads,,, DHI too always travels outside for investment opportunites,,, they should cut down on their expenses.

    Govt should limit awarding tenders to indians,,,,,,,,,,, This situation to unable to handle by govt shows how much we are dependent on India///

  6. Increasing tax on vehicles is not a solution,,,, this govt has to remember clearly,, the rich people will buy more vehicles. Increasing fuel price is also not a solution… if this happens then the cost of everything will increase and there would be backfire of high inflation,, if my calcuation is correct then it would be highest in asia surpassing china…… Ordinary and poor people will die, cannot bear this huge burden..

  7. quota is one issue, think about Parados and Landcrusiers

  8. sonam wangchuk

    sincerely most civil servants travel from office to office on personal cars and have stopped using pool vehicles. I guess we need to change to the earlier state. if no pool vehicle no meetings out of office places

  9. right_thoughts

    I fully agree that quota should be abolished completely, then only our civil servants will learn to travel in Public transport, else with quota every one will buy cars. Yes If govt. follows Nepal model then tax should be increased in cars. But all other essentials and consumables and business men should be allowed to do their daily business and should be provided with INR. IF Govt. wants small business to survive then it can’t stop providing them with INR as 90% of the goods are imported from India.

    • It is not a matter of who shud travel in Public trans. or not but to solve the nation’s problem. I think what is there must be kept. Only the boss of the office gets tour and other civil servants depend on dry salary without any incentives. They only have is grade not money and guaranteed job which is rewarded on how long they have served.but look out at other corporate workers they have bonus,corporate allowance, etc in some of the corporations sweepers are also sent on STUDY TOUR the reason is to finish the budget.

  10. WHO definition of Health:Health is a state of complete physical, mental and social well-being and not merely the absence of disease or infirmity.
    You must be wondering why health definition, when issue is about increasing tax.I mentioned purposely because peoples health is first and foremost and should not be compromise at any cost.But looking at present government mistakes and action on rupee crunch, poor and middle income people will be hardest hit and cause irreparable damage.Inflation is so high when income for the individual is minimal.On top of that, they wanted to increase taxes to solve rupee crunch.Impact of these actions are:
    1.our middle income and low income group cannot afford to buy balance diet which will lead to nutritional deficiency especially in city and towns.
    2.Psychosocial problem
    3..Increase corruption for survival
    4.Vehilce has become necessity in present world and even with increasing tax, people will find alternative means to buy it.Alternative may be black business, robberies,corruption,vandalism etc.
    Therefore, i feel there will more negative consequences than positive if proper research is not done before coming with such interventions.However saying that i support the increase in tax but with detail study in income level, consequences and affordability .Otherwise trying to solve one problem might produce many crisis.

  11. I am often confused why people fail to understand that government does not print the money like any other printing work, neither does it to cover the cost of un/planned activities nor to just pay the civil servants so that they import. It does when the public sector lends a hand to pull the people up!
    If vehicle quota is a gift from the government for the long service to the nation, then why sell such a precious gift and try to profit out of it. Who is selling the quota? Never heard once that a man from Sakteng sold off his precious gift of vehicle quota. Who is fathoming sincerity, honesty and dedication? Is sincerity, honesty and dedication too a 9-5 norm? If not, then shouldn’t sincerity, honesty and dedication echo in this vehicle quota too? You are gifted to make more comfortable while you work for the government and not to  add as an unearned income and spent, which ultimately raises the  need for more money. Gift is Gift! Not to sell!!  

    If your gift for some one is sold off the next day, would you frown, laugh or feel cheated?  
    Not all Khenpo’s do human trafficking and so all gets blamed. Not all civil servants who are entitled sells off the quota, few who does brings in the blame. So does the Tragedy of Commons trap in. 
    Thus, i second the recommendation of the committee.

  12. I too believe that taxes need to be increased for those items that needs to be discouraged. However, as regard to the import of vehicle, it must be kept in mind that we do not have local alternatives. Moreover, the policy will favour the existing vehicle owners (richer lot) if annual registration costs are not increased correspondingly at the same rate. We must not only make it expensive to import but make it expensive to maintain as well. Finally, the Govt. must improve the reach and frequency of public transport for people to really change their transport preference behaviour.

  13. to be fair to civil servants, I have to ask whether the ‘quota’ figures include all the fancy cars bought for official duties by the government itself that somehow find themselves parked in front of official’s houses. What about the quota cars for the politicians and autonomous agency officials? If this figure is purely from the real quotas given to civil servants, then it is truly shocking.

  14. May be it’s time, we rethink about the vehicles provided to ministers and even PM. If they are so much to save country’s economy. If they feel this quota has burden the country with a loss of 900 million over 10 long years. I think we are spending over 100 million in a year.. mind u in a year to import vehicles for ministers and Ministry. Please stop that Prados and buy them Indian Cars, best option is Ambassador ones. There is no shame in it, Even Indian PM uses one, including all the MPs and Ministers. I’m sure it’ll save us 1000 millions in 10 yrs if we start today.
    Prados come in dollars (at higher cost) ambassadors will come in rupees but at lower cost. So pay them in dollars, if rupee crunch hurt us.
    I feel the committee which is chaired by finance Secretary has over looked this topic or has forgotten.

  15. It may be true that many civil servants may have sold their quota but this does not mean everyone did it. We should also understand that pool vehicle facility is available to only few fortunate one. Major chunk of the civil servants are using their private cars to do their duty. If government really wants to do away with vehicle quota then think of abolishing for those who are already entitled dedicated government vehicles and also those who are using pool vehicles as their own. Generalizing is not a good way of solving problem. This might create another problem altogether of different nature. There may be various other ways of approaching this problem…

    (a) Is it necessary to import land cruiser and Prados for ministers, secretaries and head of Deptts., CEOs etc. There are much cheaper vehicles available.

    (b) Pool vehicles – are they absolutely required. In any case these vehicles are used as private vehicles by only few—-not at all used for government purpose.

    (c) Strict monitoring of the quota. Anybody selling should be penalized.

    (d) Cutting down unnecessary study tours, foreign trips especially by Head of organizations.

    (e) Parties at the end of one or two days meetings ??? should be done way..

    (f) And many more….

    • One prado could cost us from 30-35 lakhs. If govt buys 10 of them it’s  3 millions.  I’m pretty sure govt buys more than 30 prados per year. That is 30* 30 is 900 lakhs in  year. There are others like hilux, i’m sure govt buys around 50 of them in a year. 20 lakhs roughly, 100 lakhs or 10 millions from here. Then we have quota fro MPs and Ministers. It could cost us around another 100 millions.
      I’m sure if ministers and MPs could use Indian cars, govt could do lot of savings, May be at least, 700 to 800 lakhs in a year. I’m sure there are many more to be listed here.
      Instead of abolishing the quota system all together, penalize the people who misuse this quota, govt should try n implement the existing regulation properly. 
      Stopping of quota is not the way to go, definitely not the right way to go about.
      If our civil society doesn’t deserve then,
      1. Do away with Quotas for ministers  (PM included) & MPs,
      2. All the MPs should drive Indian cars including ministers as their official vehicle. Indian MPs do that even PM of India drives one.
      3. Make an alternate arrangement for rewarding civil servant, who have served our country for long time.
      Changes are good for the country but doing it in a proper manner is the most essential thing.

  16. I am shocked that we as a nation are forgoing such a huge amount of money (900 million). It is indeed time to remove this quota and make all Bhutanese pay 100% tax on all cars. Otherwise all that will happen is the price of the quota will go up and the number of cars being bought will not reduce (as people will use the quota to buy cars). Our PM need to put his actions where is mouth is and remove this extremly unfair practise of car quotas which has always been misused by our ‘ honorable civil servants’. Let us see if PM actually belives in Equity and Justice or it just a political slogan to hoodwink the nation? Time will tell.

  17. Absolutely good recommendation. 
    It is high time now that we Bhutanese step back and contemplate whether we are living in accordance with the state of our economy.
    The jump in living standards in the past 15 years is beyond anyone’s belief and now not only our economic bubble is bursting but our Egos too.  And that is good for us today and for our children tomorrow.

  18. From the Bi-Annual Report Civil Service Statistics, June 2011 we have
    1. PhD=19
    2. Masters=1375
    3. PG diploma=734
    4. PG certificates=396
    5. Bachelors= 4803
    Total= 7327
    Grade from 8 to 1= 8 dragest
    Now divide 4803/8=915 people
    Now civil servant has a limit for quota that is 8 lakhs, ant thing above that is tax as same like any other.
    So tax examption is only upto 8 lakhs, with lower or upto 45% tax
    Therefore, Tax exampted = 800000*45/100*915=329400000=0.3294 billion only. Even after assuming the highest figure from the civil service number and considering highest percentage of tax,
    Now the question is:
    1. How the so call task force calculated the amount as 2.596 billion, which is 7.8 times higher than the actual amount that i have clculated.
    2. I am not here to defend as a civil servant but the truth is not a thruth here la.
    3. We can not simply blame the civil servant for having just a simple gift of quota la.
    4. I think every body, be it civil servant or corporation they get some incentive la.
    a. BPC they get some unit of electricity as incentive.
    b. B Mobile get some incentive as voucher.
    c. Financial institution gets loan with 5% intrest.
    d. Please add la.
    e. Please calculate and see the figure yourself.
    6. I would appreciate if government ban quota and increase tax but government should do the following.
    a. More city bus is required.
    b. All lempos, secretary, DGs, DG, Dzongdas, MPs, must drive only maruti car, please follow walk the talk la.
    c. Please stop buying government pool vehicles.
    d. Please revile that the above cost of 2.596, how task force has got this figure la.
    7. Lastly let us not point the finger to one another and let us start working how we can stop further rupee crises la.

  19. Instead of getting rid of vehicle quotas, better yet, just get rid of the whole problem, and reduce the number of vehicle dealerships in the country! There will be no temptation to use vehicle quota and purchase a vehicle. Getting rid of quota or taxing them highly is unfair to the Bhutanese civil servants and will just make them unhappy and unmotivated. We must remember our own philiosophy of Gross National Happiness! 

  20. I am of the view that even the purchasing of big government vehicles like Prado and other small government expenditures like Chadi which becomes huge when accumulated should be done away. Each Lyonpos should not be entitled for a Prado every time they get elected. This will cost us a lot. Retain it for the next Lyonpos or switch over to a smaller Vehicle which would cost the government less. Lots of misuse of pool vehicles are frequent. It’s a high time for the people availing those huge entitlements and other perks to give a second thought. Serve Tsa Wa Sum with dedication, loyalty and honesty. 

  21. An alternative solution to quota would be to give some cash compensation to the long serving civil servants- may be about Nu. 50,000. When MPs get 7 lakhs 50,000 appears reasonable.This way all the parties will be benefitted. Less vehicle leading to less pollution and less out flow of hard currencies. The civil servants will be happy, in any case most cannot afford to buy foreign cars, and therefore land up selling their quotas for cash.If the rich wants to buy, they can do so by paying full tax.
    The problem with our system is it sleeps for a long time and suddenly when it wakes up it tries to complete its pending tasks at one go and then sleeps again. It won’t listen to what people has to say. The task force has submitted its report and that’s it. Hope they will consider some of the valuable suggestions made by the writers here.

    • mr Dorji we all truly hope so. Problem with our system is the bosses don’t like it when subordinate suggest something. Who knows they might be busy looking for our addresses instead of taking our suggestions into stride and work for better future of our country and citizens.
      We are all educated and matured enough to understand this blame game and finger pointing thing.
       Non the less let us hope our govt, which we elected will do the what is best for the country and it’s people.

  22. Common task force members, what a petty recommendation you guys have come up to solve the rupee crunch… I am very eager to see the faces of these so called experts….I am pretty sure that if that task is given to a group of thikhadars( head of indian labourer), they would have come up with a better alternative…. i still cant believe either it is their decision or inaccurate reporting by the reporter…

  23. Some suggestions

    civil servants should get only one quota throughout their career instead of one quota every 5 years. They should sign a bond to serve for 5 more years if they avail of a quota.

    use only small cars as pool vehicles for local needs.

    All four wheelers to be used only for official travel outside TCC limits and should be maintained by a separate division which should be monitored strictly as it usually are the ones in charge who really misuse pool vehicles.

    all govt and corporations officials who beg HM for their cars as soelras when they leave office should be named. if they were not ashamed to beg, they should not be ashamed to be named as shameless beggars.

    every minister and secretary should have only one car on duty. I believe many have two.

    Urgently work on a public transport system for Thimpu, P/ling, G/phug and SJ.

  24. I see, the so called ‘The Task Force’  thinks this is the smartest move. To me it doesn’t make much sense. In other words the task force had made the following recommendations: 
    1. Walk on foot wherever you want to go. May be use horses and carts
    2. Carry your own bags or use potters and horses
    3. Use hand tools to move earth 
    4. Do everything slowly 

    Whether the government increases tax or not, the money will always flow out of the country. The correlation between the vehicle quota for the civil servants and the number of cars bought by the people doesn’t seem alarming to me, not even the amount. So I am sorry if the Task Force’s intention was to alarm the people, it just won’t. 

    The simple reason for rupee crunch even without having to form a task force is the “Trade Deficit”. And the government should try to work on this rather than trying to put on the useless austerity measures which will only affect the common people. Elites always get through and ride the law whatever it is. 

  25. I don’t think there was requirement of taskforce anyway. It is the work of economists and there should be given an economic analysis rather bouncing back with personal theory and simple observation. It is just simply behind what many people would support without analysing and going through a rethinking process.

  26. Looks like a lot of civil servants (who are too used to get their ways all the time) are getting pissed off with this recommendation!!!!!! Come on dudes stop getting pissed off. Lets work for the good of the nation for once instead of only looking at your own personal gains all the time.

    • Common guys!.  Let us all move through a rethinking process. Let us conceptualise ourselves with our own living style, being blessed in such a wonderful country, believing in Gross National Happiness. Our leadership is strong and capable and we believe  in each other for the wellbeing of the Nation. What is something wrong with us is our attitude that you don’t care if thats going to dishearten the others even if thats not going to bring a big change for ourselves or scociety, badly defeating the concept of GNH and being  bhudhhists. If we fail to understand the value of professionalism, dedicated services, respect for senior civil servants, I m 100% sure, we are not going to grow up. Meaning, let us push up and let ourselves get pulled up, just not  by  trying to pull down and  see others at your level rather trying yourself to reach the others level, through inspiration and motivation.

      A proud citizen is the wealth of our nation and he/she is only proud when his/her age progresses with qualification and seniority   that basically helps to more efficiently deliver his services with more enthusiasm and motivation. As and when there is  a problem, we have a habit of blaming the politicians, bosses,  and the systems. Most of the  solutions suggested is to  “put off”, or “stop ” if that doesn’t work!  There is no solutions as such where it  is constructive to improve the situation.  Just reflect what happened with Bhutan Lottery. It was through public pressure it has to be stopped, infect which was corrected  and therefore could have run smoothly latter.( mistake is the basis of learning and learned through mistake enhances better results). Not everyone were forced to participate, it was for the people who are willing to and capable of. That  was one of the source of income( I know many would disagree.. but thats the fact). Why are you not talking about that????

      Instead of trying to stop what is already there in place and seeing as a threat, we need to realise its importance with respect and rather  should suggest something that would work better to earn IC. The initiative taken by MoA  to meet vegetables within and direction of  our government to stop importing vegetables is a kind of good initiatives and there   could be many areas where we could look into. So, let us think through and stop about what has been acceptably functioning.  Let us respect the people who had struggled to complete 16-20years of his life time in studying, people who have been working without judgement of day or night(doctors/nurses),  people who started serving our country  before you we were born. Quota is just a simple recognition given for all these and we need to have respect for the decision of government. The efficiency of the government service delivery lies on motivation and enthusiasm of senior civil servant, it will not be realised unless  we are in place. Lets us rather spend more time on our work than spying on  what others are getting and doing.

  27. “The task force said that import duty and sales tax in Bhutan for vehicle imports  are the lowest in the region”. Its true but did u guys realize why? other countries they have their own production and Bhutan dont have. what Bhutan produce? GNH and without inflow of rupee heheheheehhe shame….government alys focus on increasing the tax on cars…Y? unreasonable la…if we see our public transport is as bad as we dnt have any…i m really frustrated with our DPT govt. 

  28. very interesting topic and it is sad to hear such news…
    yea i turely agree that govt is trying to torture the innocent peoples and the civil servants by increasing the tax on vechicles, not improving the public transports, not increasing the salaries etc…by doin so how can we survive in this small country…so my sugestion is please find better solution, rather than torturing the peoples…please follow GNH concept instead of talking to the outside peoples..cheers

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