Be restraint on tax, expenditure in initial phase: Finance Minister

Kathmandu, Aug 12: Finance Minister Dr Yubaraj Khatiwada has urged the provincial and local levels to be restraint in terms tax and expenditure because the fiscal federalization had just begun.

During a programme organized by the Inland Revenue Department here today, Minister Khatiwada said, “We’re in the initial stage of the implementation of fiscal federalisation, so it was not necessary to increase tax and expenditure. Random tax in the province and local levels results in negative impact. Only increasing tax does not ensure economic growth,” he underscored.

Rather than increasing the rate, the net (limit) of the tax can be widened, he said, adding that government wants to ensure social justice through the tax system. The Minister further argued that the tax in the local, provincial and federal levels must ensure justice and promote self reliant economy.

The public service must be made effective and smooth for effective management of tax system and control of revenue leakage. On the occasion, Finance Secretary Dr Rajan Khanal said the tax collection and management could be made effective with the coordination and cooperation between the private sector and government. “Although the federal government has given some authorities to the local levels, there was the competition of imposing tax,” he admitted.

Moreover, Revenue Secretary Sishir Dhungana viewed that some policy level reform was imperative as per the international standard. FNCCI Chairperson Bhawani Rana said as tax system is a foundation of prosperity, so rising trade deficit must be curbed and the tax net increased.