MPs’ vehicle quota: No ceiling and high car taxes may create ‘quota millionaires’

In an era of high and super high vehicle taxes, especially on third country imports, like Toyota Prado, Toyota Land Cruiser and other luxury vehicles, the lack of any ceiling on MPs’ vehicle quotas could potentially turn some of them into overnight millionaires.

This is because the two vehicles, Toyota Prado and Toyota Land Cruiser, which have been traditionally popular among the business, bureaucratic and political elites in Bhutan, are now imposed with around 180 percent tax. Similarly, all high end luxury vehicles that usually come through third country imports have taxes from 120 to 180 percent.

If a Toyota Land Cruiser SFX 01 with full features costing Nu 5.64 mn before tax was bought with 180 percent tax consisting of 100 percent Customs Duty, 50 percent Sales Tax and 30 percent Green Tax then the cost of the vehicle after taxes would be Nu 15.81 mn.

However, if the MP’s quota is used, the buyer would save 150 percent in tax excluding the compulsory 30 percent green tax which would mean the quota would be worth Nu 8.47 mn in savings. This savings could be even higher with other cars like Range Rovers, Mercedes, etc., that are more expensive than Toyota Land Cruisers and Prados.

Given that after the recent hike, MPs salaries are around Nu 120,000 per month, each MP would earn around Nu 7.20 mn in their five-year term. However, their one single vehicle quota could be valued up to Nu 8.47 mn and even higher.

Even if the more common and slightly cheaper Toyota Prado was under consideration then each MP’s quota savings would be worth up to Nu 4.25 mn.

In the previous Parliament (2008-2013) when MPs were given a lump sum Nu 700,000 and quota free imports in a time of much lower car taxes, it was found that many MPs following the popular practice in the civil service sold their quotas. The difference was, unlike the civil service quota with a Nu 800,000 limit, the limitless MPs’ vehicle quota sold well above Nu 1 mn.

With a combination of now high taxes and high-end cars being both a status symbol in the case of rising number of rich individuals and families and also a necessity for business sectors, like tourism, hotels, industries, etc., each MP’s quota is now worth millions.

Given the controversial but popular practice of selling quotas among public servants, even if a MP offered a 30 percent discount on his or her Nu 8.47 mn worth quota for a Land Cruiser, the MP still stands to earn around Nu 6 mn on one quota. Even if the MP offered a 30 percent discount on the Nu 4.25 mn worth quota for a Prado, the MP can still earn Nu 3 mn on one quota.

Apart from having no ceiling both the existing Parliamentary Entitlement Act 2008 and the proposed Parliamentary Entitlement Bill passed by the National Assembly and now in the National Council has no clause saying that such quotas cannot be sold.

In contrast, a Ministry of Finance notification on vehicle quota rules stipulates a ceiling of Nu 800,000 for civil servants every seven years from grade P3A and above. The rules forbid sale of the quotas, and in fact, civil servants have to sign a legal document stating that if they sell the quota then they will not get any more quotas, and the person holding the quota will attract all taxes. This rule was put in place to prevent import of two vehicles from one quota as the money gained from selling the vehicle quota was used to buy another vehicle.

The Finance Minister, Lyonpo Namgay Dorji, said that though there were no rules in place prohibiting MPs from selling vehicles, they were not expected to sell the quotas but to rather use it to buy a duty vehicle. Lyonpo Namgay Dorji, however, admitted that there were no penalties or laws to stop MPs from selling their quotas unlike civil servants.

Another interesting development is that not only MPs, but also the PM, 10 Cabinet Ministers, Opposition Leader, National Assembly Speaker and NC Chairman will be eligible for vehicle quotas even though all of them have duty vehicles with drivers.

The Finance Minister explained that this was nothing new as in the former government not only did the former Prime Minister take his Land Cruiser and former ministers, NA Speaker and NC Chairman take one Prado each on completing their term, but most of them also took the vehicle quotas.

According to records, only the then Agriculture Minister and now Opposition Leader, Dr Pema Gyamtsho, returned his quota on receiving the Prado while the former Economic Affairs Minister and now MP Khandu Wangchuk did not apply for the quota at all. Records also show that the then Opposition Leader and now Prime Minister was not even offered a vehicle quota at the time.

The Finance Minister said that in addition to it being a past practice to give quotas to ministers who were also MPs, it was important as ministers would need a vehicle once they retired after five years.

Currently, all 72 MPs are eligible for the quotas.

With the vehicle ban coming in effect from 2012 it has also been found that some former MPs and ministers are yet to use their quotas, which according to the Finance Minister are still valid. This would also mean that some MPs would have two no-ceiling and no-limit quotas at hand.

The Finance Minister said that some MPs in the current Parliament had requested for chauffer driven vehicles if the lump sum amount and vehicle quota could not be given. “This would have been much more expensive in the long run for the government, as the government not only would have to buy duty vehicles for MPs but also give a driver and fuel, so it was cheaper to give the lump sum and quota.”

Earlier, there was much public disquiet over the high vehicles taxes which people felt made vehicles very expensive or unaffordable for most common people.

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