It is not possible to remove the double taxation system, as demanded by FNCCI, because of the constitutional provisions

The newly-elected leadership of the Federation of Nepalese Chamber of Commerce and Industry (FNCCI) recently called on Finance Minister Bishnu Poudel and demanded that the government remove the double taxation system, citing that the taxes levied by the federal and provincial governments had dampened the spirit of the private sector. After the country was declared a federal state with three tiers of government in the new constitution, everybody from individuals, businesspersons, corporate sector, service providers to industrialists are required to pay taxes to three tiers of government. It is obvious that a state collects taxes from its citizens to run the government and carry out its various development works and social programmes. The stronger the taxation system, the more efficient the government is.

The FNCCI delegate has, however, argued that the double taxation system has added an extra burden on them to run their businesses, and the situation has become even worse following the outbreak of the COVID-19 pandemic, which forced the government to impose a lockdown for seven months that ultimately rendered tens of thousands of people out of their jobs. It will take months, maybe even years, to recover from the impact of the pandemic.

The FNCCI delegation had stressed on the need to implement the monetary policy and the programmes mentioned in the annual budget. It also vowed to come up with its vision paper on how to uplift the private sector and the priority areas. Although the finance minister was non-committal on removing the double taxation system, he assured them that the “obstacles” faced by the private sector for its growth would be removed. After the outbreak of the pandemic and the subsequent lockdown, every sector which creates job opportunities within the country has either been shut down or run partially, forcing the government to inject more money to revive the economy.

While the FNCCI’s demand to remove the double taxation system may be justifiable when the country is passing through an unprecedented level of economic crisis, the government’s hands are also tied because of the constitutional provisions. The government may offer the private sector some concession in some areas where possible, but it cannot bring an end to the double taxation system, which refers to corporate level and personal level taxation, among others. The business community should also be ready to provide full salary to their employees and they should not lay them off if they want economic incentives from the government. Seeking economic benefits from the government and not providing any solace to the workers is inexcusable. It is the women, low-paid workers and daily wage earners, who have been hit hardest because of the pandemic. The government should first address the unemployment problem of the vulnerable groups by introducing a minimum wage policy that can play an important role in the recovery process. At the same time, the business community should also adhere to the Business Code of Conduct that the FNCCI endorsed 16 years ago. Abiding by the prevalent statutes, law and process, among others, is part of the Business Code of Conduct.

Bad cops

Corruption runs deep in the police force, and it often involves officers of high rank, but it is rare to see action being taken against them for abusing their authority for personal benefit. However, Nepal Police Headquarters has suspended three erring cops – two superintendants of police and a police inspector – for taking bribes. The three were suspended after a preliminary investigation showed their involvement in wrongdoing. It is learnt that the conduct of the SPs had been a talking point even within the police force.

Their punishment will be decided by the probe team.

Especially since the dawn of multi-party democracy in 1990, there has been much talk about the growing corruption in the police force. It is said to begin right from the time of recruitment, with kickbacks and party affiliation later playing an even bigger role in promotions and transfers. The constant meddling by the concerned minister in power especially during promotion and appointment to the top ranks has made headlines once too often. Thus, in such a situation, it is difficult to see how professionalism can be inculcated in the police force. This can be achieved only when all political forces agree not to interfere in its functioning.