Q&A: Policy flip-flops and ‘midnight changes’ are eroding public trust
Summary
Nepal's budget process faces criticism for last-minute tax changes and political manoeuvring, eroding public trust and complicating fiscal stability. Experts argue for transparent reforms and systemic tax base broadening to improve governance.
Key Points
- Nepal's annual budget process is marred by political friction and 'midnight changes' that compromise tax policy stability.
- The Ministry of Finance is vulnerable to pressure groups but maintains some formal protocols to correct budget errors.
- The government often bypasses legislative processes to enact tax changes via the Financial Act, undermining predictability for investors.
- Recommendations include abolishing tax exemptions, creating a semi-autonomous revenue authority, and improving tax compliance through modernized systems.
