“The argument that rich people have bough their cars and now the others are being prevented is not valid, since every Bhutanese can’t afford a car and, by this argument, the number of cars can never be limited,” said MoIC secretary Dasho Kinley Dorji.

The secretary added that any other country in the world would have to restrict the number of cars coming in and gave the example of Singapore, where people had to buy entitlement certificates to buy cars. “Other factors like pollution and traffic congestion limiting mobility are also not in line with our philosophy of Gross National Happiness,” said the secretary.

A MoIC official said that the proposed increase in sales tax was also directly related to the increase in the number and type of vehicles imported, between 2007-2008, where there had been a 20 percent increase in the number of light vehicles, 12 percent for taxis, 5 percent for commercial vehicles and 3.6 percent for two-wheelers.

MoIC and RSTA had earlier this year proposed 50 percent sales tax on cars imported from India and 30 percent sales tax on cars imported from other countries. However, revenue and customs had objected, saying that, as per a free trade agreement with India, the increase in sales tax could not exceed 20 percent.

The final increased figure would be drawn up by revenue and customs, said the MoIC official.

Besides increased taxes, MoIC and RSTA also recommend increase in vehicle registration and annual renewal fees. Depending on the power and weight, it will be a Nu 400 to Nu 600 raise for light vehicles, Nu 440 to Nu 850 for trucks, Nu 360 for a five-seat taxi, and Nu 3720 for a 6-8-seat taxi, and another Nu 20 for two-wheelers.

There is also a reduction of Nu 1000 in fees for passenger buses up to 20 seats and above. The MoIC and RSTA report also recommends phasing out vehicles, which are older than 20 years, and introducing green tax on vehicles older then 15 years to reduce emissions, ease congestion and enhance safety, among others.

The recommendations also include revision of penalties on various traffic violations, in addition to imposition of additional tax on a family buying an additional car.

Instead, to improve public transport, the report proposes environment friendly transport through exemption of all taxes and duties on electric cars and subsidy on non-profitable transport bus routes across the country. It also recommends exploring alternate transport like trolley bus and sky rail, and augment city bus services by adding more buses to Thimphu and also increasing the frequency of bus services.

On asked if public pressure would ever allow the car tax proposal to go through, Dasho Kinley Dorji said: “The government’s role was to think of the larger good and ensure a safe environment and workable traffic system.”

To prevent panic buying, it is proposed that the levy of any taxes will be with immediate effect, regardless of when the purchaser placed the order or received approval for import.