Druk Nyamrup Tshogpa (DNT) yesterday filed a constitutional case with the High Court against the government for alleged violation of the Constitution by granting fiscal incentives without the parliament’s endorsement.
The party moved the Court two months after it, in a press release, asked the Prime Minister and the Finance Minister to step down on moral grounds. The government granted fiscal incentives worth Nu 1.104 billion since January 1, 2016 to May 7, 2017.
DNT’s basis of argument before the Court was Article 14.1 of the Constitution, which states, “Taxes, fees and other forms of levies shall not be imposed or altered except by law.”
The party states that it is convinced that the government has violated the Constitution and the Public Finance (amendment) Act 2012. DNT cited Section 46A of the Act, which states that a money Bill deals with “imposition or increase of any tax or abolition, reduction or remission of any existing tax.”
Speaking after the miscellaneous hearing, DNT President (Dr) Tandi Dorji said that the government’s reluctance to take a correct measure had forced DNT to take the issue to a logical conclusion.
“The government should have taken corrective measures when the Parliament accepted the fiscal incentives 2017 as a money Bill. But the Prime Minister kept saying that it was the government’s prerogative,” Dr Tandi Dorji said.
Although the recently concluded parliament session endorsed that all fiscal incentives are money bills, the government maintains that parliament’s endorsement is not required.
The government argues that Chapter 3, Section 9, Part II, of the Income Tax Act 2001 allows the government to “grant exemptions and tax holidays” in the public interest.
The Prime Minister earlier told the media that according to the judgment in the first constitutional case, it is the government’s prerogative to grant fiscal incentives. The government states that it did not alter the tax rates while granting fiscal incentives.
However, (Dr) Tandi Dorji said that the government had picked up the ‘findings’ of the Supreme Court to justify its “erroneous action.” He said that it is the judgment that is binding and that it gave no prerogative to the government to grant fiscal incentives.
DNT alleges that the Prime Minister has misled the nation by misinterpreting several legal clauses including the Supreme Court judgment. This, according to the party, is not only wrong but also a serious breach of trust that was bestowed upon the PM by the people.
In a press release, DNT stated that the decision to sue the government was taken after careful consideration and comprehensive consultation with legal professionals. In its 12-page submission, the party requested the Court to rule on the illegal and unconstitutional implementation of the tax alteration.
“The government has breached the Constitution,” the press release stated. “It is our sacred duty as a registered political party to protect the Constitution.”
The first constitutional case was also fought over tax. The Opposition filed a case the previous government in 2010 for increasing vehicle tax without passing it through the parliament. The Supreme Court judgment in 2011 asked the government to refund the additional taxes that car buyers had paid as a result of the increase in the tax rate.
(Dr) Tandi Dorji said that even if the government had accepted that the fiscal incentives were unconstitutional, it was not necessary for it to collect the tax forgone. “If the were afraid of the political implication of collecting the tax, they could have brought a legislation to give the beneficiaries a bailout,” he said.
He said that unless the issue is brought to a conclusion, future governments could also grant fiscal incentives without passing it through the parliament. “The Speaker pushed the fiscal incentives 2017 as a money bill. We don’t know what kind of Speakers come in future,” he said.
However, the press release claimed that it is not seeking political mileage by trying to fulfill the duty of protecting the Constitution. DNT is singularly focused on correcting the violation of the Constitution for the future of Bhutan rather than punishing the violator, the press release stated.
The issue, (Dr) Tandi Dorji said, was not about DNT fighting against the People’s Democratic Party but that the party wanted to ensure that the Constitution was not violated.
“We are not concerned about winning or losing the case. We are determined to protect the Constitution on behalf of the present and future generations,” he said. “We have immense trust on our judiciary to use their wisdom and bring corrective measures to this violation.”
During the miscellaneous hearing yesterday, court officials said that the Court would appoint a panel of judges to review case. The panel of judges will study the nature of case to ascertain whether or not the Constitution and other laws pertaining to tax were breached.
The panel would deliberate the case to understand and ascertain whether the case is a “constitutional writ or a litigation.” The panel would also study if the case fulfills the requirements for adjudication. Once the case is reviewed, the panel would decide whether to process further or dismiss it.
Meanwhile, the DNT President also said that the government’s recent statement, saying that the government would seek the Supreme Court’s interpretation on the fiscal incentives, was an attempt to dilute the issue. Questioning the timing of the statement, he said, “They issued the press release when we were ready to file the case.”
DNT believes that it would not only be unconstitutional for the government to directly seek the Supreme Court’s interpretation, but also dangerous for democracy. “We cannot not allow the government to seek the Supreme Court’s interpretation of a constitutional provision,” he said.