KATHMANDU: Economists participating in a meeting of the Finance Committee under the House of Representatives have stressed the need for restructuring tax administration, improving public finance management, and making the Value Added Tax (VAT) system more effective.
Speaking at the meeting, economist Dilli Raj Khanal said there should be a clear link between economic policy and the national budget, emphasizing that economic restructuring must be given priority.
He stated that long-discussed policy reform agendas should be integrated into the principles and priorities of the budget process.
Khanal also highlighted the need to advance structural economic reforms alongside good governance, stressing the importance of identifying priority sectors of the economy and preparing a clear long-term restructuring strategy.
Similarly, economist Dirgha Raj Mainali said the current structure of tax administration requires broad reform. According to him, structural problems have persisted within the tax administration system for years, making institutional restructuring necessary to improve professionalism and effectiveness.
Mainali added that although ongoing reform efforts are positive, deeper structural changes are essential as meaningful results may take time to materialize.
Economist Rupak Khadka said the effectiveness of Value Added Tax depends largely on its structure and implementation.
He suggested that a broad-based VAT system with a single tax rate would be more beneficial for the economy. Referring to New Zealand’s GST system as an example, Khadka said systems with limited exemptions and broader tax coverage tend to be more effective.
He also noted that the scope of tax exemptions in Nepal has expanded in recent years, making the VAT system increasingly complex.
Experts participating in the meeting concluded that long-term reforms in public finance policy, tax administration, and the revenue system are necessary to strengthen overall economic management.
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