Rationalise tax rates to encourage paying up
The budget in its addendum brings amendments to fiscal Acts. In India, when Dr Manmohan Singh was finance minister he initiated economic changes using this very tool. Our government should take that cue from him. Four issues this budget should address are:
Firstly, tax rates should be rationalised to give Nepali businesses an edge over the economies of scale of our two giant neighbours. Programmes should be initiated to increase the tax base to supplement revenue loss. Rationalising tax rates not only encourages investments and prevents capital flights but also increases foreign investments.
Secondly, tax laws should be reviewed to curb discretionary powers of tax authorities and clarify ambiguities. That means subjectivity in laws should be minimised as far as possible. This will decrease corruption and encourage people to pay tax. Also, tax procedures should be simplified for hassle-free tax payment.
Thirdly, this budget should incorporate the concept of a multipurpose unique National Identity Card (preferably electronic) to replace citizenship cards. This will help the government track tax evasions, facilitate tax collection and discourage money laundering and help in welfare delivery, national security and voter registration.
Finally, the budget should focus on infrastructure development both in word and deed. It is a fact that in a developing country economic growth follows infrastructure development. It should boldly provide for capital expenditure.
Jagadish Bhattarai is a tax consultant