Editorial | Nepal’s high tax, low returns regime
Summary
Nepal's extensive tax system extracts significant revenue amid a growing fiscal deficit, while citizens face poor public services and economic stagnation. Economic expansion and tax system reform are needed to restore public trust and fiscal sustainability.
Key Points
- Nepal has around 50 different taxes, including high rates on income and value-added taxes, yet faces a fiscal deficit of Rs179.48 billion.
- The tax burden is among the highest in South Asia, but public services like schools and healthcare remain inadequate.
- Revenue growth has slowed significantly post-pandemic, with nearly half of tax revenue relying on imported goods, making it vulnerable to global disruptions.
- Fiscal sustainability is threatened by large unpaid liabilities and debt, requiring tax system simplification, improved administration, and economic expansion to restore trust and growth.
