Essay on federalism in nepal and its future. Federalism in Nepal | Debika Khanal -

In the absence of proper unbundling of the common taxes and fee, each level of government is interpreting the constitutional provisions the way it suits them much to the annoyance of businesses and enterprises. Our country ranges from 60m above the sea level to the highest point on earth Mt.

The Federal System of Government in Nepal

Along with the technical support to establish appropriate policy strategies, guidelines, and systems, SNGs need financial resources for costs related to its administration and collections, and skilled human resources for operations.

The challenge is to incentivize equitable economic growth and provision of public and merit services. Policy Recommendations Some of the policy recommendations to increase revenue mobilization in SNGs are as follows: Introduction While the constitution has assigned a larger functional, semijudicial, and fiscal authority to elected local governments, it has also created greater responsibilities for effective service delivery and accountability toward citizens.

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It is one of the richest countries in the world in terms of bio-diversity due to its unique geographical position and altitude variation. There is a paucity of revenue related information.

However, the Constituent Assembly Jestha could not settle the various issues regarding the determination of federal units in Nepal.

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They are central government, state government, and local bodies. This system is new for South Asian country Nepal. Moreover, there is poor connectivity between other provinces and Kathmandu. Clear demarcation of the functional responsibilities without any ambiguities provides clarity on revenue and expenditure assignments of each level of government, which is critical for a sound fiscal federal system.

It occupies an area of 1,47, Sq. It is obvious the implementation of fe deralism has the mountain 0 of challenges ahead. Some local governments have begun imposing taxes, fee and royalty on institutions and projects within their geographical jurisdiction.

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There is an apprehension that high fiscal dependence on the central government will adversely affect the quality of devolution and autonomy of SNGs. The necessity of federal system in Nepal is clean and clear. The three major acts endorsed by the Parliament provide the legal framework for revenue mobilization in Nepal. Generally, there are three administrative units under the federal system.

Clear functional assignment.

Federalism in Nepal | Debika Khanal -

Risk of unhealthy tax competition and inefficient movement of capital and resources due to excessive rate differentiation across provinces and local governments.

Further, assignment of taxes and revenue sharing arrangements will also need to be reviewed. Others have raised property tax, tourism tax, local resources utilization tax and so on. The second amendment of the Interim Constitution of Nepal endorsed the concern of Nepalese people through different political parties to make Nepal a federal country.

Insufficient clarity on expenditure and revenue assignments. Also, inventory of natural resources needs to be developed, followed by objective basis of sharing the revenue. Additionally, several model laws have been prepared and provided to local governments to support the legal framework.

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Alternative tax and nontax sources. This will cause double or multiple taxation. Such a multiple tax system would retard growth and hurt large number of people. Though it has yet to get the final shape as the members and chairman of the commission need to be appointed, the commission has started its work.

In the absence of proper unbundling of the common taxes and fee, each level of government is interpreting the constitutional provisions the way it suits them much to the annoyance of businesses and enterprises.

How Nepal is Facing the Challenges of a Federal System

Ideally a single act for each tax should be prepared instead of having one Act for all the SNG taxes. One hundred and twenty-two political parties participated in this election, and 30 of them got representation in the Constituent Assembly-II.

Since agriculture is an activity characterized by low income generation and high volatility, its revenue potential is limited. NeAt present about 28 countries of the world is having the federal system. On the other hand, tax systems should be kept very simple and avoid too many exemptions.

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Our country ranges from 60m above the sea level to the highest point on earth Mt. An IT-based system needs to be developed for efficiency and transparency, and a compliance strategy needs to be developed to increase tax revenues Model laws for SNGs. Institutional capacity in most local governments is poor.

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Agroincome tax is the only tax assigned exclusively to the provincial governments. There is a necessity of federal system in Nepal. It is desirable that taxation laws are made at the provincial level for the taxes assigned to the SNGs so that definitions are common across local jurisdictions and excessive differences in the tax rate is also avoided, which will curb unhealthy tax competition.

Share on: Revenue department, in province and local governments, equipped with skilled human resource, IT based system, and adequate budget for its administration provides an important institutional set up to facilitate increased revenue mobilization.

This is unlikely to change drastically in the federal setup because revenues assigned to local governments under the Local Self Governance Act LSGA, pre constitution are largely the same as the ones provided under the new constitution. The policy should determine right type and right level of taxes. With the devolution of functions and functionaries to SNGs, the federal government should be leaner in federal system.

People raised voices for a federal system of government. One rural municipality in Dolakha district, for example, demanded annual royalty of one million rupees from a hydropower project operating in the district. We should not forget the fact that federalism can be very expensive to runi for hedding is the small country rade 10 Contents.

It also fosters inclusive development by promoting peoples' participation in local governance. Regarding agroincome tax provincial taxcommercial, and plantation crops may be taxed initially.

MOFAGA is mandated for coordination, facilitation, and institutional development support to local governments. There is also a paucity of data in SNGs.

  1. Federalism in Nepal - Wikipedia

For a healthy working of a fiscal federal system, clear demarcation of the functional responsibilities of each level of government is needed and all cases of ambiguity need to be resolved.

Federalism is not a magic stick to bring about most a waited changes. The central or the federal government is responsible for the external defense, national monitor policies, foreign affairs and military mobilization.

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Why is federal system felt necessary in Nepal? The course of history got changed in BS.

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This would give rise to a large vertical imbalance in raising resources and would call for a significant volume of transfers to resolve the vertical imbalance. Taxes like tourism fee, entertainment tax, vehicle tax, and royalty are included under shared jurisdiction of provincial and local governments. Right tax policies and efficient administration. However it is in the list of the least dev eloped nations, Realizing the fact that unitary system failed to bring substantial changes, the conce pt of federalism emerged and has been on the way to implementation with the declaration constitution and division of federal provinces.

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Also, it will be efficient to administer vehicle tax by the provincial governments rather than the local governments since an efficient vehicle tax requires common tax rates and definitions across the entire province.

In this system, states are formed on the basis of geographical structure, race, and language, population, natural and human resources, etc. The Ministry of Finance has come up with the white paper, which has outlined the current economic challenges, and the measures to be taken to address those challenges, including reduction of the ever-expanding trade deficit and the initiatives to expedite capital-intensive development projects.

The federal government has the power to enlarge diplomatic territorial integrity run national level project, make national monetary policy and so on state government has the power to make federal laws maintain law and order in the state carry an day to day administration prioritize infrastructural development and so on.

Jump to navigation Jump to search Federalism refers to the division of a nation into various autonomous states so development empower local people ensure the place of minorities backward and group in the main stream of development and mak bring e state provided amenities equally accessibleto of federalism emerges in Nepal after the historic success of popular man movement The ac 73 due to the failure of regionalism to bring about desired changes.

Mechanisms to improve and enforce compliance, and public information and communication on tax are important elements of a good revenue mobilization strategy.

These include, i local level financial procedure act and regulation; ii local Level public procurement act and regulation; and iii local level revenue act and regulation being finalized. In the federal system, when the state government is found to be ineffective and unsuccessful or when the national emergency is declared, the federal government controls and directs the respective states until another appropriate arrangement is made.

These are: Inadequate revenue assignment to SNGs The revenue sources assigned to local governments by the new constitution property tax, land tax, business tax, and rental tax are the same that the previous local self-governance act had assigned and as per the past records, these sources were only sub-optimally exploited, hence revenue generation from these sources were nominal and inadequate to support the operation costs of most local governments.

The main functions of the MOF in relation to the fiscal federalism are coordination among the federal and SNG agencies, drafting of fiscal laws and regulations, and preparing necessary criteria and basics for the implementation of IGFT Act. There are broadly two concepts of the system of government: Suitable institutional mechanism needs to be set up for the compilation of relevant fiscal data so that meaningful research and analysis can be conducted to provide inputs for future policy interventions, and for revenue sharing by federal government.

Given the limited revenue bases assigned to subnational governments SNGsand their weak revenue generation and administration capacity, the resultant gaps at the SNGs will have to be met primarily through fiscal transfers by the central government. SEE Also: Large horizontal disparities Most of the tax bases essay sample harvard Nepal are concentrated in essay on federalism in nepal and its future around Kathmandu and the borders between Nepal and India.

Photo credit: The unitary system of government has been practiced in Nepal for a graphic design career research paper time. Building up of the institutional capacity of SNGs for revenue collection will need a fresh beginning as they have not been very active in this area and do not have required policies, systems and processes in place. Nepal practiced the unitary system of government throughout its recorded history.

Also, SNGs need to pass necessary laws to mobilize their own resources. But, this effort has essay on federalism in nepal and its future confined only in blue print. The power is distributed between central and provincial s. However, it has been felt that it was not effective for the development and unity of the country. So it is better to keep the tax system simple and tax rates low.


So, the federal system is not yet implemented in Nepal. Lindr Geeralism a mation has dual government system ie.

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List of 7 States in Nepal The concept of federalism in Nepal is born some years ago but now Nepal is on the way of the concept of federalism in Nepal. Further, though the constitution has assigned specific tax and nontax revenue sources to SNGs, revenue generation by SNGs will require adequate and skilled human resource, and substantial technical support to enhance their knowledge and capacities, and to put in place appropriate institutional systems and policies.

How Nepal is Facing the Challenges of a Federal System | Development Asia

To reduce the dependency and increase autonomy, SNGs will need to ensure that assigned thesis statement question mark and nontax revenue sources are exploited to their full potential, and new tax sources are explored.

Institutional strengthening of SNGs. Features of Federal Central Government Foreign affairs National security and military management National highway, railway, postal service Big hydro power, multi-provincial project Features of Provincial State Argumentative essay graphic organizer middle school pdf Formulate state policies and laws Mobilize state security force and maintain public security Carry out local development activities Construct development infrastructures Preserve language, art, culture and other heritage In the USA, the state government is responsible for the affairs related to the state including education and health.

Statement of Issue In Nepal, the new constitution has assigned expenditure responsibilities and revenue sources to all three tiers of the government. Essay peaceful karachi there are some challenges of the federal system in Nepal and Nepali is ready to face the challenges of the federal system in Nepal. While most of the key revenue sources remain with the central government, expenditure responsibilities of the subnational province nat 5 critical essay marking scheme local governments are relatively larger creating a large vertical imbalance.

The federal system is a political system where a country is divided into different autonomous states or provinces.