TAKING STOCK: Wanted: An entrepreneurial govt


Whenever I make a presentation about making Nepal a zero duty state, someone will usually ask, “Who will pay to run the government?” I limit my reply to saying that we could and should

cut the size of government by 90 per cent, and that Singapore, Hong Kong, Switzerland, and the USA with either no duties or low rates of around two per cent do manage. However, taxes are not the only way for government to raise finances. The opportunity for entrepreneurial government departments to earn money is limitless. There are many ways in which government expense centres can become profit centres. Consider how the 1984 Olympics were financed. The city of Los Angeles (LA) in California, USA hosted the games. LA

did not want to spend the one billion dollars, which was the cost Montreal in Canada had to incur eight years earlier.

The civic entrepreneur Peter Uberroth and his organising committee had spent the prior three years convincing the International Olympic Association (IOA) that LA could hold the games without money from the government. IOA finally agreed. The committee put its words into deeds and the games actually turned a profit of $ 224 million. How did they do it? They got corporate sponsors for everything. 50,000 volunteers worked to organise transport, park vehicles, feed the people arriving from 118 countries and also helped with a security system to thwart terrorists. Old sports facilities were recycled. Television rights were sold. In the US, this kind of entrepreneurial thinking normally happens when taxpayers revolt and refuse to pay more. Smart politicians realise the sentiment of voters, cut taxes, decrease spending and find alternate means of raising revenue.

Consider the following US examples which are just a sample of what is given in the book

‘Reinventing Government’ by David Osborne and Ted Gaebler: Milwaukee turns 60,000 tonnes of sewage sludge into fertilizer and sells it for $7.5 million every year. Could Kathmandu do the same?

Some of California’s police departments charge drivers convicted of drunk driving $75 a night for putting them up in cheap motel rooms which serve as jails. Someone is paid to ensure that the convicts don’t get out. Could the police in Nepal charge felons and recover four times the cost of arrest and imprisonment from them?

Cities around the US are turning public land into use where they can earn revenues from it. This enabled Orlando Mayor Bill Frederick to not only develop the city hall, but earn rentals from land leases which enabled property taxes to be cut by 29 per cent over a ten-year period. Does Nepal not have public land which could be used for hotels, parks and shopping malls?

Government can also raise money by charge of user fees. Lower general taxes then become possible. The system becomes fairer and, in poll after poll in the US, it has been shown that the public prefers this approach. Consider what happens when people travel. If they are on an all paid expense account they will fly first class, stay in 5-star hotels, and order exotic dishes in classy restaurants. The same people, when on their own account, might go economy, stay in a motel, and pick up a pizza for dinner. Likewise, when government provides free services, the demand becomes unlimited and the funding requirements zoom skywards. User fees raises funds and reduces demand for services to manageable levels.

Sunnyvale in California charges fees for the use of its public services. It generated 40 per cent of its budget from fees, franchisees and concessions. There are charges for garbage collections, water and sewage services, recreation facilities, parking, police services at special events, and health services. Could Kathmandu consider similar options?

The airport in Kathmandu could be turned into a profit centre. Private entrepreneurs could be allowed to run video and slot machines and perhaps even a casino. Better still would be to privatise the airport and the surrounding land. The means to raise money which government has at its hand are limited only by the imagination of the people who hold the reins of power. If they think entrepreneurially, budgets can increase even as taxes are eliminated.

(The writer can be contacted at: everest@mos.com.np)