In a meeting with vehicle importers, the Prime Minister highlighted the discrepancies in the application of green tax on vehicles imported. With the Prime Minister’s Office sharing the details of the meeting, especially how buyers were overcharged, many went online demanding justice.

In highlighting the discrepancies in the application of Green Tax, inconsistencies were revealed. In other words, how the Green Tax was imposed on buyers was not uniform. Minutes after the PMO shared the details of the meeting, netizens are asking for accountability, including penalising the so-called vehicle dealers for imposing varied taxes.

Bhutan does not manufacture vehicles. All our vehicles are imported from as far as South Korea and Japan. While a necessity, because of poor and inefficient public transport, import of vehicles is on the rise even when the economy is in the doldrums.   To put into context, after the vehicle import moratorium was lifted in August 2024, seven new vehicles hit our roads every day. We imported 216 vehicles, worth about Nu 216 billion in September 2024 alone. Most of them were passenger cars.

The issue is not about import of passenger cars, but also about how importers are making passenger cars expensive and playing with taxes. Tax officials, according to the PMO, reported that 11 out of 38 vehicle dealers had overcharged Green Tax to their customers depositing lesser amounts to the government, amounting to approximately Nu 31 M. Passenger cars are already expensive in Bhutan. If taxes are levied at the whims of the importers or dealers, our tax laws are at fault.

Given that we have fixed tax percentages, there should not be discrepancies. In other words, those dealing with vehicles have cheated both buyers and the government. While many are appreciating the government for pointing out the discrepancies, others are asking for refunds.

The demand for refunds makes sense. The green tax is fixed at 20 percent. There should not be inconsistencies. The Prime Minister instructed vehicle dealers to reimburse the excess amounts to their customers within a month. This is a good call as owning a vehicle has become expensive in Bhutan.

Unlike in many countries, owning a vehicle in Bhutan, especially a passenger car is a necessity. When middlemen are involved, the cost of vehicles shoots up making it more expensive. Bhutanese are calling for a change in rule where they can buy directly from dealers outside the country. This is because a car is a lot cheaper when the middlemen are not involved. The vehicle import is a lucrative business. However, the business shouldn’t be at the cost of buyers, or by  circumventing tax laws.

Our tax laws are clear. There is a percentage fixed on any import. How they can manipulate to enhance income at the cost of buyers is a mystery. The government has done the right thing in finding out the inconsistencies and making importers accountable. But there is more to do.

The Prime Minister cautioned dealers that if vehicle pricing is not maintained at reasonable levels, the government may disclose import cost details to the public.

The details (cost and profit)  should be made open to the public. If a few dealers are profiting from the ambiguities, we should call for change.

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