The decision to revise the lease rate of state land is a bold decision, if not timely or even late. Not many are aware, but the lease rate private businesses pay the government is peanuts compared with the income they make from businesses established on state land.

Urban Bhutan is short of space. In towns like Thimphu and Phuentsholing, owning a plot of land or getting one, on lease, for not less than a decade is an opportunity to make the most of it. Some have thrived from paying the minimal fee to the government.   The current rates were fixed more than a decade ago. It has to change given that the government or thromdes are always broke, hampering initiatives or plan to bring changes. 

Given that the expanding urban areas are once mostly paddy fields belonging to farmers, the few empty spaces have become lucrative as they pay a nominal lease fee vis-a-vis the opportunities. The lease rates are so minimal that a small pan shop under the stairs of a structure built on leased land is enough to pay the annual lease rate. While some had benefited, many including the State had been at a loss.

The State or the government needs revenue. In recent years, we have seen that development plans are affected or came to a standstill because of lack of funds.  Revenue from taxes and fees  contribute to the government coffer. It has to be reviewed and revised every few years. That the previous government revised the land and property tax is a good example. 

Increasing tax is not a popular decision (ask the DNT government). But the improved revenue from progressive taxation policy would mean ploughing back the revenue for improved services. Urban Bhutan has a lot of basic problems. We are still complaining of potholes, shortage of drinking water, proper waste management and so on. The increase in revenue from taxes, fees and levies will be invested back to improve services. If the empty spaces are developed as public spaces, it will be worth more than the fees collected. Thimphu, for instance, lacks open public space.

We can expect business and interest groups appealing to authorities to change the decision of the National Land Commission. There will be many convincing reasons including support for private sector growth. The Commission should not give in to pressure from interest groups. To put into context, ask a private school or an automobile workshop established on government land paying a nominal fee. The annual fee can be met, we can safely surmise, from a single student’s fee or repairing five pool vehicles.

There will be complaints and a few unhappy people or businesses from the decision to revise the lease rate. The revision in land and property tax is a good reference point. An individual owning a building on a 13-decimal plot in the Thimphu Thromde would be paying not less than 400 percent in property and land tax. It could be higher in the core urban areas of the thromde.

Are they complaining? Yes. Should we give in to the pressure? No. In paying higher taxes, the Thromde should be more accountable to the taxpayers. The improved revenue from taxes should result in improved taxes. In the capital city, we are only talking about basics like, pothole-free roads, improved waste collection, reliable drinking water, streetlights and proper drainage system.

A lot of wise decisions are challenged and changed to keep voters happy. The NLCS’s decision should receive full support of the government.