Tax issues were exaggerated at local level: Dr. Khatiwada

Kathmandu, Sept. 12: Finance Minister Dr. Yuba Raj Khatiwada has said that the tax-related issues at the local level were largely exaggerated.

"This is our first experience in fiscal federalism. And both the provinces and local governments are exercising tax rights for the first time so there were some confusions which have been duly addressed," he said while talking to the Gorkhapatra daily, a sister publication of The Rising Nepal.

According to him, though some local bodies whimsically charged taxes on some topics, there have been corrections. The federal government had asked the local bodies not to charge taxes beyond their rights as defined by the constitutions.

"Many tax rights have been devolved to the local governments. Many villages have been developed into municipalities, and families in cities should pay property tax which might have given them the feeling that the taxes were exorbitantly high. Many households have property but don't have regular means of income. I also reinforced the feeling that tax was raised unfairly," said Dr. Khatiwada.

He refuted the rumours that the government was planning for the supplementary budget in the current fiscal year. However, he maintained that the budget of next fiscal year will be more inclusive in terms of social security for the senior citizens and children.

Most of the concerns will be addressed by the new insurance policy, and the children from the families below poverty line will be given more priority.

"To reduce the unlimited liability on the government including various social security programmes and post-quake reconstruction, we couldn't increase the senior citizen allowance through the budget of the current year," said the Finance Minister.

He said that the joint election manifesto of the erstwhile CPN-UML and CPN-MC was not supposed to be implemented in the first year to the power but would be implemented gradually over the next four years.

"In federal structure, budget also means the income and expenditure details of the province and local governments. Therefore, the overall size of national budget is more than Rs. 1500 billion. Don't only go after the size and numbers of the budget," he stated.

He emphasized on the impressive budget implementation so as to ensure maximum benefits to the people and country.

According to him, process of formulation laws and working procedures required for the federal structure and human resource management are at the final stage. Once these works are completed, there will be better budget execution.

"Our aim is to work with speed. But the speed without responsibility and accountability would be counterproductive. Effective mobilisation of resources is our priority.  The situation will be improved visibly from October," said Dr. Khatiwada.

He maintained that the government actions or policies were not responsible for the bearish trend of the capital market.

"Our macroeconomic indicators are in good shape. The capital market is affected mainly by the psychology of the investors and availability of the capital. Increased interest rate and supply of shares might be the reasons behind the poor capital market performance," he said.

He said that the government was working to increase the size of the capital market, and resolve the issue related to capital gain tax.

He also said that the pegged exchange rates with the Indian currency would not be revisited.

"Till the Nepali and Indian economy go forward in the same direction, we won't have problem with the pegging. This is not the appropriate time to review the exchange rate with India," he said.

Published in The Rising Nepal daily on 13 September 2018.