Kathmandu, September 2

The Government of Nepal is preparing to make an amendment to the Local Government Operation Act-2017, to make it consistent with other prevailing laws.

The Ministry of Federal Affairs has written to the Association of District Coordination Committees, Municipal Association of Nepal and National Association of Rural Municipalities, seeking their opinions and suggestions with regard to the proposed amendment.

The Federal Affairs Section of the MoFAGA said the amendment was aimed at making it consistent with constitutional provisions and other laws in force. “The MoFAGA will incorporate opinions and suggestions received from the concerned stakeholders on need basis,” it said in a letter sent to ADCC, MAN and NARM yesterday.

Joint Secretary Suresh Adhikari, MoFAGA spokesperson said the government was preparing to make necessary amendments to the act after some of the provisions in it contracted other federal and provincial laws. “We are also holding consultations with the stakeholders. The act was made before enactment of many federal and provincial laws and hence, it contracted the provisions of the other laws now,” he said.

Officials said provisions related to forests, land reform, education and tax stipulated in the act were not consistent with the federal and provision laws. 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.

Most of the rural municipalities and municipalities made preparations to impose 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.

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

A version of this article appears in e-paper on September 3, 2020, of The Himalayan Times.