The idea of paying tax is unpleasant to anyone who works hard to earn an honest living. While forced to part with hard-earned income, one generally has no control over how that money is spent by the government. The recent multibillion-dollar bailout of financial companies by the U.S. government is a good example, as homeowners who lost their homes to foreclosure don’t want Wall Street fat cats to be saved ahead of them.
Although tax may be unfair, it is the duty of every citizen to pitch in and help the government run the country. So we swallow the bitter pill, hoping that taxpayers’ money will be put to good use and benefit the country and its citizens.
In Nepal, the system of tax collection is still rather primitive. One can fool the government and not pay taxes for years. There are plenty of big businesses in the capital, Kathmandu, that escape paying taxes every year and yet the government is unable to catch them, let alone take legal action against them.
In addition to its outdated collection and reporting systems, the country is also seriously behind in finding new areas that generate revenue. Then there is income tax, although the number of people earning enough to be within the tax-paying bracket is low. As for levies on businesses and industries, the chain of corruption is so strong that little of this intake flows to the national purse.
As a result, every year the Nepalese government loses millions of rupees in revenue due to corruption and outdated tax-collection methods. Nepal’s tax code is fit for the medieval age, and lack of enforcement is forcing the country to be dependent on generous aid by foreign governments and organizations. This is a matter of national shame.
Nepal’s Finance Minister Babu Ram Bhattarai gave Nepal a “pie in the sky” budget earlier this year, promising big changes. However, after some number crunching it seems Bhattarai realized there was not enough money in the government coffers to fund the dreams he promised. So now he wants to tax the people to make up the difference.
The first sector to be taxed is education. The minister wants all private educational institutions to pay a 5 percent “education tax.” His idea is to use the tax money to educate marginalized children including those in the remote Karnali region.
Bhattarai’s idea of educating marginalized children and those in Karnali is noble. But is taxing private educational institutions the only way to achieve that goal? How about cutting down on government expenditures on frivolous items like good-for-nothing foreign trips, where the minister’s wife and children tag along on taxpayers’ money? How about letting off hundreds of “yes men” hired by the government to “return favors”? Perhaps Bhattarai would not mind taking a pay cut or not getting paid for a year or two for the sake of rebuilding the country.
The point is that education is one of the basic rights of a citizen, like healthcare, freedom and security. So the government should not tax the education sector, whether it is private or public.
Nepal needs new revenue sources, but burdening schools and universities by way of extra taxes is not the way to find them. Bhattarai should instead look into more rigorous enforcement of existing tax laws, crack down on corruption and find new revenue collection avenues that do not infringe on basic rights.
He could take the lead on legislative matters and work on updating Nepal’s outdated tax code. There are few people around the world who enjoy paying tax. But they pay because they know it is important to do so.
The ongoing protest over Bhattarai’s education tax proposal shows that Nepalese too are in that group. Their protest does not mean they don’t want to help rebuild the country or that they want to remain dependent on foreign handouts. Their anger is against the government’s attack on education, particularly private educational institutions.
Previously published at UPI Asia Online.