April 7: The government has refused to deposit billions of rupees collected from workers under the title of social security tax for the past one decade in the Social Security Fund.

According to the contribution-based Social Security Act, 2074, there is a provision that the Social Security Fund can mobilize even the amount collected from the Social Security Tax.  Sub-section 2 (e) under section 26 of the Act has a provision that the amount collected so far and the amount to be collected in the future as social security tax shall be deposited in the Social Security Fund. However, the Ministry of Finance has not yet transferred the amount to the SSF.

SSF officials say that the Ministry of Finance has not yet transferred any amount collected in the name of social security tax to the fund, contrary to the legal provision.

At present, the SSF is running social security schemes only with the funds contributed by the private sector establishments affiliated to it and the workers working in those establishments. The SSF said that this amount has reached more than Rs 52 billion. The Auditor General's report has also raised questions about the Ministry of Finance not handing over the social security tax to the SSF.

"In Section 26 (2) (e) of the Contribution-Based Social Security Act, 2074, there is a provision that the amount to be collected under social security tax shall be deposited in the fund," the 58th report of the Office of the Auditor General states, adding, "The social security tax was deposited in the state treasury instead of being deposited in the Social Security Fund and is being spent without being allocated to its specific area.”

Since the social security tax is collected as revenue every year after tax deduction, the deducted amount should be directly deposited in the SSF and the SSF should use the amount according to its objectives, the OAG report added.

SSF Spokesperson Bivek Panthi said that although they were coordinating with the Ministry of Finance to bring the amount to the SSF, the ministry did not cooperate. "Despite repeated requests, the Ministry of Finance has been reluctant to hand over the amount collected under social security tax," Panthi said.

Officials of the Ministry of Finance admit that the social security tax is collected as revenue and say that this amount is being spent for the benefit of the people.

Finance Ministry spokesperson Uttar Kumar Khatri says the social security tax is like any other tax collected by the government. Although the contribution-based Social Security Act, 2074 states that the amount should be deposited in the SSF, Khatri insists that there is no need for the ministry to transfer the amount to the SSF as it is similar in nature to other taxes collected by the government.

"The government will spend this amount according to its priorities," he told New Business Age.

Yogendra Kunwar, chairman of United Trade Union Coordination Center, says that the money collected from the workers should be spent for the safety and rights of the workers.

"Since the government is collecting social security tax through the Social Security Act, that amount should be deposited in the Social Security Fund," he said. Kunwar is of the opinion that even if the government took the money by setting up other welfare funds in the name of the workers, it could not be spent effectively for the benefit of the workers.

This tax was introduced with the aim of providing financial support to workers who had become unemployed due to political transition in the country and when the labour situation was not good.

Panthi said that if the government does not give the amount raised in the name of social security tax, the SSF will not be able to expand its social security schemes.

For the past one decade, the government has been collecting funds in the name of social security tax at the rate of 1 percent from the wages of workers and employees working in organized institutions. The government has been collecting tax under this heading since Fiscal Year 2066/67. The government has collected Rs 57.53 billion as of the last fiscal year under the heading of social security tax. According to the Ministry of Finance, more than Rs 60 billion has been collected as of the first 8 months of the current fiscal year.

A social security tax of 1 percent of taxable income was introduced from wage earners. The then Finance Minister Surendra Pandey initiated this tax after the industries started to shut down due to strikes. The fund was set up for the social security of workers who lost their jobs or were affected by disasters.

However, the government has not shown any interest in depositing this amount in the Social Security Fund and spending it according to its specific purpose. Therefore, questions are being raised about the effectiveness of this tax being raised by the government.