Economists Call for Major Reforms in Tax Administration and Public Finance Management

Economists have stressed the need for restructuring tax administration, strengthening public finance management, and enhancing the effectiveness of the Value Added Tax (VAT) system.

During a meeting of the Finance Committee under the House of Representatives on Thursday, economist Dr. Dilli Raj Khanal said there must be a clear linkage between economic policy and the national budget, emphasizing that overall economic restructuring should be given top priority.

He further stated that structural reforms and good governance should be advanced simultaneously to ensure sustainable economic progress in Nepal. Khanal also suggested that a long-term restructuring strategy should be developed by identifying priority sectors of the economy.

Another economist, Dirga Raj Mainali, highlighted the urgent need for comprehensive reforms in the existing tax administration system. He noted that the current structure has long-standing structural weaknesses and needs to be reorganized to improve efficiency and effectiveness.

Mainali added that although some improvements have been made, deeper institutional reforms are necessary, as meaningful results would take time to materialize.

Similarly, economist Dr. Rupak Khadka emphasized that the effectiveness of VAT largely depends on its structure and implementation. He suggested that a single-rate VAT system would be more beneficial for the economy.

Citing New Zealand’s Goods and Services Tax (GST) model, he pointed out that a broad tax base with minimal exemptions has proven to be effective. He further argued that a uniform tax rate would make the system simpler, more transparent, and easier to administer compared to multiple-rate structures.

The economists collectively recommended strengthening economic management through reforms in public finance policy, tax administration, and the overall revenue system to ensure long-term economic stability.