BUSINESS & ECONOMY

VAT implementation improving

By a staff reporter

Though the revenue collection is not picking up at the expected level, experts believe that the implementation of Value Added Tax (VAT), which was started in the country couple of years back, is getting better these days.

When the government decided to implement VAT in the country, the business sector at the initiation of Nepal Chamber of Commerce (NCC), Nepal’s oldest business organization, opposed it. The business community even resorted to protest programmes like a Bandh then. But after more than two years of its implementation, the new tax system is doing better in collecting more revenue.

According to a recent interview to a vernacular daily, prominent economist and VAT specialist Dr. Rup Khadka has said that implementation of VAT is improving in the country. “At the end of fiscal year 2055/056 total number of firms registered for VAT were only nine thousand and eighty-two. But, exactly after one year at the end of fiscal year 2056/57 that number increased to as high as seventy thousand six hundred and twenty-eight.”

Revenue collection is also improving after the implementation of VAT in the country. The expected revenue collection in the fiscal year 2056/57 was Rs. 10.46 billion and the government was able to raise Rs. 10.40 billion revenue during the same period.

The revenue collection through VAT was increased by almost 11 percent during fiscal year 2055/56. It made a quantum jump next year to collect almost 29 percent more in fiscal year 2056/57 than the previous year. According to sources, in the present fiscal year, the tax officials have expected to make almost 32 percent increment in the VAT revenue collection. 

Even though the statistical picture shows a rosy future of VAT implementation in Nepal, many experts are still of the opinion that there are still many hurdles to be overcomed in the new tax system. They point out that tax rebate and tax waive, which are the major aspect of this scientific tax system, are still full of confusion.

“For the effective management of VAT, problems regarding tax rebate and tax waive should be implemented efficiently,” they say. Another serious problem noticed regarding the implementation of VAT is on bills. Use of bills during sale of goods and consumables are still regarded as a waste of time and useless thing by many consumers in the country. In many cases, customers are charged 10 percent more than the actual cost if the shopkeeper issues the VAT bill. Until such issues be sorted out, implementation of VAT will not be successful - many experts say.

How to control corruption

By Janardan Dev Pant

Corruption is one of the biggest problems Nepal is facing today. It has been effectively established as a part of Nepal’s bureaucratic and political culture. Its pervasiveness in all spheres of our national life is recognized by the government and the public at large. But the government’s action to date is largely limited to rhetoric and directing some senior civil servants to prepare suggestions on corruption control.

However, from the private sector, an independent organisation called as the Policy Analysis Council (PAC) prepared a report on how to control corruption. The report was also  submitted to the Prime Minister by PAC President Janardan Dev Pant on June 29, 2000.

This report has done in-depth examinations of the legal, socio cultural, economic and historical roots and consequences of corruption. The report has found  the definitions provided by the Corruption Control Act of 2017 B.S. grossly inadequate and ineffective. While the existing institutional frameworks to fight corruption have to work on the basis of the provisions of this Act, the report has found that  the situation today is there is a general lack of clarity as to what kind of activity, dealing, behavior or transaction constitutes a corrupt act. The possibility of ‘punishment’ is always low as compared to the magnitude of ‘reward’ received. A general attitude of leniency prevails in terms of actions against corrupt individuals because actions themselves are based upon ‘exchange’ activities (You benefit I benefit). It is also true that a general lack of courage, readiness, and capacity to fight corruption prevails among those responsible for controlling corrupt acts.  It is also true that prevailing social norms and values have become increasingly weaker in separating what is ethically right and wrong. The line between ‘good’ and ‘bad’ conducts in public life and individual transactions are increasingly being blurred. Eroding moral standard has a lot to do with this increasingly rampant corruption.

 A sudden raise in an individual’s material possessions by indulging in corrupt practices is not a matter to be seen with disgust, abhorrence. Rather, such individuals are accorded with better status. This is one aspect of the eroding moral standard in the Nepali society.

If the root-cause is material deprivation, as some perspectives tend to put forth, the tendency of those in higher socio-economic and political echelons to indulge more in high-profile corruption cases is paradoxical. In a way the prevailing culture of corruption may be a manifestation of the culture of poverty, but as the report rightly points out, the chances of being undetected or going scot-free after detection of corrupt act is very high at present. Power, money, and a greedy disposition rule supreme everywhere and whatever legal provisions are there are subservient to these elements. In view of these circumstances, the report strongly suggests the expansion of the definitions of different aspects of corruption; strengthening of agencies responsible for fighting corruption; increased severity of punishment; improvements of the existing laws and formulation of new laws; development of standards to determine the incentive structures of public servants; strengthening of the Public Service Commission or establishment of separate Service Commissions for teachers, police, army and those in public corporations.

 It provides suggestions to control election related corruption and strategies for creating awareness among the public about corruption. This includes anti-corruption campaigns through the use of both electronic and printed media of mass communication, movies, and through the incorporation of corruption related themes in the curricula at various levels.

The report  talks about existing provisions pertaining to the agencies concerned with different aspects of corruption control (Commission on Research on Abuse of Authority, Judiciary, Judicial Council, Special Police, Revenue Research, District Administration Office, Police Offices) and suggests ways to strengthen and transform these agencies. It suggests abolition of the Revenue Research Department and hand over its mandates to the Commission on Research on Abuse of Authority (CRAA); and that the CRAA should be sufficiently empowered to conduct investigations against Supreme Court Judges and officials from other constitutional bodies. It is further suggested that the CRAA should have an independent Security Group (not to be controlled by either the Nepal Police or the Nepal Army) in order to facilitate the CRAA to work without physical fear. The report also elaborates on the need of a separate Service Commission for the CRAA to oversee the appointment of people to work with the CRAA; the CRAA Service Commission should also oversee the appointment of the Security Group people.

 This report is a result of individual efforts of PAC’s members and financial assistance were not solicited from donors of any kind.