January 2: The private sector has complained that the local government has increased the business tax, scrap tax and road tax excessively. In the past, the central government used to collect such taxes through the local bodies, but after adopting federalism, all the responsibilities in this regard have been given to the local level.

The Birgunj Chamber of Commerce demanded an immediate amendment to the constitution, arguing anomalies in these taxes after being placed under the jurisdiction of the local governments. President of the chamber Subodh Kumar Gupta says that in the past, taxes were collected according to the laws of the central government, but now there is widespread chaos in the name of tax collection because the local government are collecting such taxes at their whims.

“Business tax, scrap tax and road tax were under the central government initially and were levied in accordance with the central law. According to the concept of federalism, now the business tax is the responsibility of the local government. The local authorities are charging these taxes arbitrarily,” said Gupta. 

 The chamber alleges that when the federal government delegates authority to the local government, the local government makes laws and collects taxes in an arbitrary manner. Tax payers have demanded that the federal government should make laws for collection of taxes at the local units. The suggestion of the private sector is that the federal government should monitor whether or not the laws and regulations made by the federal government are being followed.

The private sector made such a demand after the local governments including Birgunj Metropolis, which is located in the main industrial and commercial hub, started charging such taxes haphazardly.

Medanta Construction, the tax contractor of Birgunj metropolis, was found to be collecting tax contrary to the agreement.

An official of the Birgunj Chamber of Commerce and Industry said that even after finding the evidence of the contractor collecting scrap tax on industrial raw materials imported from India and cement produced by local industries, the metropolis did not take any action.

It was found that Birgunj metropolis and Jitpursimra sub-metropolis collected scrap tax on coal imported from India through Nepal's ICP customs. Even though the taxpayers have been complaining that the local governments set arbitrary rates on business, property and road management taxes, they have not been heard.

The concerned officials of the local government have said that action will be taken if the contractor is found to have collected tax arbitrarily. However, the private sector has been complaining that the leadership of the local level seems to be apathetic towards taking action against the contractor even after providing them with evidence.

Suresh Rungta, coordinator of the tax committee of the chamber, says that the local levels have been abusing the authority given by the Local Level Operation Act 2074. He said, “Although there is a legal provision to take into account the tax payer's ability to pay tax while determining the tax rate, the local level completely ignored this provision. Their only intention is to squeeze from the taxpayers.”

In the past, the government had canceled the scrap tax due to the movement of traders in Birgunj. “Reinstating the tax that was abolished a decade ago is a regressive step in the tax system,” said Hari Gautam, vice president of the chamber .