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Kathmandu Tuesday January 15, 2002 Magh 02, 2058.
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Quo Vadis, VDIS?
The deadline for the voluntary disclosure of
income scheme (VDIS) announced by Finance Minister Dr Ram Sharan Mahat in the current
fiscal year budget expired the other day. The government managed to collect 360 million
rupees in taxes during the whole scheme period, falling short of its official target by
more than half. The objective of VDIS was to net tax defaulters and help meet regular
government expenditures. Many people have gone from rags to riches since the restoration
of democracy and such people tend to neither disclose their property and sources of income
nor pay income tax. A majority of them continue to default on taxes. Had the government
taken stringent measures against the defaulters, it would not now have had to opt for an
ad hoc approach like VDIS, nor would national economic performance and social development
have been so poor.
When announcing its current fiscal budget, the
government had urged tax defaulters to voluntarily disclose their income and wealth.
Following that VDIS was announced. This is the second VDIS announced within five years.
Under an earlier VDIS, the government had collected 15 million something rupees. The VDIS
which just concluded underlined that tax defaulters had to pay at the rate of 10 percent
on disclosed wealth even if such wealth was amassed illegally, or else face in-depth
investigations which may lead to confiscation of properties. Private sector entrepreneurs
represented by chambers of commerce and industry have criticized the tax drag net. But the
defaulters also include politicians, doctors, lawyers, builders and promoters, bureaucrats
and corrupt officials, real estate operators, etc. There are also a few questions that
remain. How has the government prepared the list of tax defaulters? Have corrupt political
leaders and government officials been included in the list? Corrupt politicians and
government officials who have amassed wealth illegally are still in power. Is the
government really prepared to take action against them under VDIS?
Tax evasion in this country has been rampant as
a result of poor policy and ineffective implementation. A 1990 cabinet decision stated
clearly that "all ministers whether in or out of power have to disclose their sources
of wealth within 15 days." Of the present forty-one ministers in the government, only
two have submitted statements on their sources of wealth. The rest including the Prime
Minister seem to remain blissfully ignorant of such legal provisions though many among
them own assets disproportionate to their sources of income. This speaks volumes about the
commitment of our political leaders to the country’s development. There is then the
question of how honestly politicians use the tax payers’ money for the development of
this country. Meanwhile a crude nexus has developed between politicians, businessmen and
bureaucrats to thwart any move against tax evasion. It is high time the government
recognized this and took action against those at fault. There are finally two other issues
that the tax administration should confront. One is the lack of clarity about the whole
VDIS scheme, with many people not certain how it applies to them individually, if at all.
The second problem is the fear of tax gauging by greedy officials who might prey on the
naivety of the general public. The tax people should have done a better job of explaining
the provisions to the people and winning their trust. |
