Druk Gyalpo Jigme Wangchuck dedicated a great amount of his time in studying socio-economic and political conditions of the young Kingdom bequeathed on him by his father. Tax reforms drew his attention as it directly affected the Bhutanese people. The King was of the view that if taxation system was reviewed it would help the people to alleviate their economic and living conditions.

In the course of his review the Druk Gyalpo found out several loopholes in the existing taxation system. There were many estates left vacant by some families who migrated to other places. However, the community living in the area where the vacant estates were located had to bear the tax of the idle estates. The other problem was the decline in the population due to a disease but the tax register remained unrevised. This meant that the tax burden on the community was heavy. Another problem was a group of people known as zurpa or ‘those who lived on the side’ who were landless and did not have to pay tax. Though there were so many problems associated with taxation, the local administrators could not initiate much change as there was no incentive to motivate them.

The tax system was not uniform and the revenue was not used for the welfare of the people. Even the Dzongpons and Penlops collected tax and controlled the revenue. Realizing the irregularities in the tax system, the King centralized the tax collection authority and ensured that the revenue was used for enhancing the living conditions of the people.

The Druk Gyalpo resettled the zurpas in the vacant estates. This had many benefits. The vacant estates were cultivated that led to the improvement of the economic conditions of the people. The resettlement of the Zurpas reduced the tax burden on the vacant estates earlier borne by the communities. Moreover, the Zurpas became tax payers and contributed to the national revenue. The King took pains even to update the tax records in accordance with the size of the population. The records of the taxes were also submitted to the King by the Nyerchen and the king personally ensured that that the people did not suffer from heavy tax and corruption.

Certain taxes paid in kind like cloth tax, fodder tax, firewood tax, soot tax, butter tax, etc were removed. Till then, each household had to supply a load of firewood and hay to the Dzong. The people also had to pay other commodities as tax depending on the region. As the eastern Bhutanese were popular in weaving textiles they had to pay tax in the form of cloth.

Taxes like rendering free transportation to the State was adjusted and the services paid for. Moreover, the tradition of offering male foal born to the horse of the taxpayers to the State was also abolished. The family with few members was given a horse or a mule to enable them to provide transportation services. Even, labour services were reduced.

Many officials were solely supported by taxes collected from the people and the tax burden was heavy for the people. With the restructuring of the administrative set up it led to the abolition of some un-necessary posts thereby lessening the burden.

Though the tax reforms did not lead to a substantive increase in the revenue of the State it brought about a more balanced and equitable taxation system. This made the life of the people much easier to live as they could now keep most of the fruits of their toil for their own family members.