Econ-ity » September 12, 2014

Daily Archives: September 12, 2014

Why I think twice before paying taxes?

Mounting grievances and inefficiency of government institutions in Nepal which operate on taxpayers’ money makes us wonder if tax is really the necessary evil it is often touted as being. In principle, the rationale behind tax is justified. However, the current scenario does not do justice to the rationale.

Citizens have incentive to pay taxes as long as the benefits of what is asked by government in various forms of taxes is higher than the services rendered by authorities. But the government is not doing what it is supposed to do for compensating taxpayers’ giving up of their hard-earned money; we get much less services than what we paid for.

The notion of paying tax brings second thoughts to my mind. There are a number of reasons why:

Bureaucratic Inefficiency

As a Nepalese citizen, I pay my share of taxes and by this virtue alone, the authority is obliged to ensure effective and efficient public service delivery to me. Sadly, this rarely happens. The service delivery mechanism has a lot of loopholes; there is excessive red-tapism, no proper delegation of authority and the idea of good governance is limited to plans and policies.

Furthermore, the government has failed to create conducive environment for the private sector. A substantial portion of the fiscal budget is spent on different administrative headings than making capital investments on infrastructure. There is lack coordination between authorities which results in significant wastage of resources. For instance, roads built by department of roads are frequently dug down by others, once for drainage, again for water supply, and so on and so forth. Moreover, with dismally low results, wastage of resources inherent in Nepalese bureaucratic structures implies that our tax money is going down the drain.

Corruption in Public Sector

Corruption in Nepal ranges from nepotism to significant monetary scam. It is dispersed like an epidemic in almost all government organizations. Corruption Perception Index (CPI) published by Transparency International gives Nepal a score of 31 on a scale of 0-100, where 0 and 100 represent “highly corrupt” and “very clean” respectively. Abuses of authority, secret deals and bribery have lasted for years.

While the commitment of Commission for Investigation of Abuse and Authority (CIAA) is commendable, our tragedy still remains that the corrupted receive clean sheets due to dysfunctional mechanism. Moreover, recent CIAA report reads rampant corruption at local levels, particularly at Village Development Committees (VDCs), Municipalities and District Development Committees (DDCs).

I can’t foot Public Enterprises’ Loss and their Inefficiency

As of today, the number of fully and partially owned public enterprise has reached thirty seven, out of which sixteen operate in net loss. The total cumulative profit of fourteen public enterprises is about NRs. 65 billion and loss incurred by seventeen others is around NRs. 43 billion. Here, NTC alone accounts for NRs. 39.5 worth of cumulative profits. (Source: Yellow Book, Performance Evaluation of Public Enterprises: Ministry of Finance, 2014)

Janak Shikshya Samagri Kendra, a public institution that has the responsibility of ensuring timely production of subsidized education materials for public school students across the country has not been able to deliver for quite some time now. There have been instances when the books have reached students in the second half of the academic year only. Another example is that of Nepal Electricity Authority (NEA).Despite of a lot of money being poured in for the purpose of electrification it has not been able to cut down hours of load-shedding. Nepal Oil Corporation (NOC), similarly, has not been able to deliver—long queues in the petrol stations despite over NRs. 39 billion worth of taxpayers’ money floated to them being a constant reminder of that failure.

The more I understand government and its actions, the more doubts I have over having to pay taxes to fund its inefficiency.

Suraj Dhakal

About Suraj Dhakal

Suraj Dhakal, a student of Development Studies works with Research Department at Samriddhi, The Prosperity Foundation. Mr. Dhakal was previously associated with We Inspire Nepal (WIN), a youth led leadership and personal development organization.

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