Kathmandu, January 29

The Government of Nepal is in the final stage of amending the Local Government Operation Act-2017 in line with other prevailing laws.

According to a three-monthly report card published by the Ministry of Federal Affairs and General Administration, earlier this week, it has sent a draft of the amendment to the Ministry of Law, Justice and Parliamentary Affairs and the Ministry Finance for their opinion and consent.

The MoLJPA and the MoF are expected to endorse the draft paving the way for enactment of the amended act.

Earlier, the MoFAGA has sought opinions and suggestions from Association of District Coordination Committees, Municipal Association of Nepal and National Association of Rural Municipalities, with regard to the proposed amendment.

The report said that the draft amendment was prepared by incorporating the opinions and suggestions collected from the stakeholders on need basis.

The MoFAGA said the amendment was aimed at making it consistent with the constitutional provisions and other laws in force. The government initiated the preparation for amendment to the act after some of the provisions contained in it contradicted other federal and provincial laws. The provisions related to forests, land reform, education and tax stipulated in the act are not consistent with the federal and provision laws, and the constitution.

There has been duplication and confusion in collection of taxes and fees in all three levels of the government - federal, provincial and local - due to contradiction in constitutional and legal provisions.

Schedule-9 of the constitution has the provision of tourism fee as the concurrent power of the federal, provincial and local levels, but the revenue generated is termed 'concurrent power' in some places and 'exclusive power' in other places, thereby resulting in confusion in collection of tourism related tax and fee.

Section 55 of the act requires all levels to levy integrated property tax and most of the rural municipalities and municipalities made preparations to impose the integrated property tax accordingly.

However, the Finance Act substituted the integrated property tax with property tax later. Various provinces and local levels have been exercising the power to levy taxes on their own accord. Some of the provincial and local levels had been imposing taxes beyond the legal boundary, while others had yet to exercise their powers despite having tax potentialities.

According to a study conducted by the Office of the Prime Minister and Council of Ministers, many rural municipalities have implemented the tax system without adequate preparation and discussion with stakeholders due to confusion.

"Prevailing laws do not have the provision of tax on transportation of agricultural, livestock and forest products as practised before, but some local levels are still not clear whether they should levy tax on such products," it states.