It is everyone’s dream to get a decent job, help your parents and relatives, buy a small car, a piece of land and own a small house before you retire in life. For most, the first loan in life is taken to buy a car. Almost everyone struggles to pay off this first loan for the first few years of their employed lives.
This postpones all other life plans and likely extinguishes the dream of helping parents, having a happy family and owning a home. Many of us, especially those from rural backgrounds, have parents and relatives who have been waiting eagerly for us to finish our studies and get employed. Hopes are pinned on us to pull the family out of poverty. Our dreams of helping them and their hopes go to vain when we are unable to make any contribution to the family at home. This increases friction within the family and affects happiness.
After having lived in Australia for more than a year, I have realised that our taxes on cars need to be thought through again. The average annual income of a decently employed Australian is AUD$ 60,000. The average annual income of an RCSC selected graduate (P5) would be about Nu 250,000. But in Australia people can buy a very good car with AUD$ 20,000, which is about 33 percent of their annual income.
Car loans are available at 5 percent per annum. But in our country, the smallest car you can buy costs over Nu 500,000 (double your annual income). Things have become worse after the levying of several taxes on import of vehicles. So even to buy the cheapest car in the market you will have to save all your salary for two years, without food, clothing and shelter.
Our car loans have interest rates as high as 12 percent per annum. For a simple comparison, as of today, the price for a Hyundai Tucson, auto-transmission, diesel, starts from AUD$ 27,990, including five years on road warranty and other benefits in Australia while the same Tucson, manual transmission in Bhutan costs about Nu 1.5 million (≈AUD 30,000) and add 120 percent on that as tax. The cost of a car is more than double in Bhutan compared to Australia (figures may not be exact).
I am in no way arguing that our salary is low and we need to be paid like in Australia or other developed countries. I am just comparing in terms of relativity and even with our smaller income, we may be able to come up with some mechanism like lower interest loans and tax-free family cars. These would make things easier for people to live a happier life. We don’t manufacture cars in Bhutan but cars have become a necessity. I strongly feel that, what we don’t manufacture in our country but really need for daily life should not be taxed or should be taxed the minimum. Tax more on things that we import but have an equivalent in our country; this would drive promotion of local products.
Was there a reduction in the number of cars bought by people after the tax was increased and the green tax was introduced? I have no data but I am sure the number of cars coming into the country has not reduced if not increased.
People had to buy cars because it is no more a luxury, it is a necessity; to go to work daily, to drop your child to school, to visit your parents and relatives in far flung villages; all matters of happiness. Instead of reducing the number of cars, it increased the loan burden of an individual or a family. Instead of paying off a loan in seven years, it drags on to 15 years; ultimately increasing stress, increasing tension and affecting the happiness of an individual and family.
Our roads are bad and people drive for long distances to reach home and come back in the shortest of time. People need reliable and comfortable cars. Because of high taxes for imported cars people are forced to resort to cheaper cars with questionable safety and unaccounted comfort. If there were no taxes, cars would become cheaper and even average income families can afford to buy more safer and comfortable cars. This adds to happiness and values in the family and the society.
It is my personal view that a family car for each family should not be taxed and at best subsidised. After all, for a population of over 700,000, minus about 45 percent of children and young people, how many families will there be? Therefore, providing a tax-free family car would be a cap in the feather for the current government or a favourable agenda for the 2018 campaign.
Contributed by Tshokey Dorji