Finance Minister Dr. Swarnim Wagle has clarified that the government’s proposed tax policy will not affect low-income and marginalized citizens, emphasizing that taxes will be collected from those utilizing expensive services.
During Sunday’s House of Representatives meeting, Finance Minister Dr. Swarnim Wagle responded to questions raised by Members of Parliament (MPs) regarding the Economic Bill, 2083. He explained that new tax proposals are introduced for a comprehensive transformation of the public education and health systems.
Tax Reforms and Public Services
Refuting MPs’ concerns that fees on education and health would burden the poor, Minister Wagle stated that this tax is not aimed at ‘Bhuin Manche’ (common people). He described it as a strategy to strengthen a state treasury by collecting small amounts from various sources. The Finance Minister noted that historical reforms were made to ensure middle-class citizens do not face heavy tax burdens. He informed that income up to Rs. 10 lakh annually is exempted from tax, and an annual tax deduction of up to Rs. 25,000 on expenses for private schools has been arranged. Furthermore, he mentioned nearly Rs. 1 kharba has been invested in the health sector, with Rs. 21 arba allocated for paying outstanding health insurance dues.
He said, “About 75 to 80 percent of children in Nepal study in non-private schools, where this tax is not applicable. A general equity fee collected from families who can afford expensive fees in private schools will be spent on strengthening public education.”
Addressing Capital Expenditure Concerns
Addressing questions about low capital expenditure, the Finance Minister expressed confidence that while the spending situation in the current fiscal year was not satisfactory, it would improve next year. He argued that policies allowing ministries to reallocate funds and stricter pre-preparation would solve a traditional problem of capital expenditure in the coming year.
Foreign Exchange and Education Abroad
Minister Wagle justified the 3 percent education service fee levied on foreign exchange for students studying abroad. He mentioned foreign currency is a rare resource for Nepal.
He said, “Foreign currency should be spent on importing essential machinery and equipment for development, but currently, Rs. 1 kharba is going out annually in the name of education. It is consistent with a socialism-oriented economic policy that those who avail of this facility pay some additional fees.”
“Fresh Start” for Entrepreneurs
The Finance Minister called the special provision in Section 46 of the bill a “fresh start” for entrepreneurs. He clarified that this provision targets businesses bogged down by tax disputes, penalties, and interest burdens for years.
He stated, “This is not a tax exemption, but an opportunity to settle old disputes by paying the principal tax and a 1 percent penalty.”
Electricity VAT and Economic Growth
Speaking about the proposal to impose a 5 percent Value Added Tax (VAT) on electricity consumption exceeding 50 units, he committed that prices would be adjusted so that consumers would not bear additional burden. He further mentioned that bringing the electricity sector into formal tax net would be beneficial for the state in the long run. Finance Minister Dr. Wagle claimed this was the boldest and most integrated tax reform since 2048 B.S., and urged MPs to support it to achieve the country’s economic growth targets.
This article was originally published on https://bajarkochirfar.com. Translated with the help of AI and reviewed by our editorial team.
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