Kathmandu, February 8

The National Natural Resources and Fiscal Commission (NNRFC) has said that revenue sharing and fiscal transfer to lower layers of administration will be started from the next fiscal year.

Though the chairman and members of the constitutional body are yet to be appointed, its Secretary Baikuntha Aryal has informed that the commission has started works as per the rights provided to the commission by the NNRFC Act and the Intergovernmental Fiscal Management Act.

The next budget will be based on scientific fiscal transfer and revenue sharing to the lower layers of administration. Based on the programmes submitted by the ministries, the National Planning Commission (NPC) has segregated the programmes that will be executed by the federal government and lower layers of administration and the apex planning body will provide ceiling to the ministries by next week.

The ceiling given to the ministries is a tentative outlay of the federal government for the next fiscal. The provincial and local governments will also start their planning and filter the programmes that can be executed in the next fiscal that will provide an estimate of the resources required for the next fiscal.

The NNRFC will carry out a study on the strengths of revenue mobilisation, resources generation and determine the grant that needs to be transferred to each level, according to Aryal. “The next budget will come with the spirit of the federal structure.”

The NNRFC has said that 30 per cent of excise and Value Added Tax (VAT) is expected to be shared with the lower layers of administration as a result of which the federal government’s revenue collection under these major two headings will drop. The federal government has to make the resources planning accordingly.

Secretary Aryal further stated that the capacity of each province and local body will vary in terms of revenue mobilisation. Most of them are relying on the federal government for grant transfer instead of mobilising their own revenue sources. The NNRFC has said that there will not be multiple collection centres for revenue like a separate body for each federal, provincial and local government.

“To simplify the tax collection process, a single tax office — whether it is under the federal administration or provincial or local administration — will collect revenue and the collected revenue will be shared as per the revenue sharing formula envisioned by the law,” informed Aryal.

Along with the completion of the provincial assembly polls, provinces have also started setting up ministries and departments on their own. The federal government is expected to be leaner as the provincial and local levels of administration have more authority and responsibility to deliver public utility services and goods.