Economists have suggested that the government prepare a budget that will improve the tax system and increase private sector investment.
The economists suggested increasing the income tax limit and reducing the tax rate during the meeting convened by the Finance Parliamentary Committee on Thursday. The economists also suggested increasing the salaries of employees by 25 percent.
Expressing his views in the meeting, Prof Dr Ram Prasad Gyawali stressed the need to bring a program to encourage the private sector to expand investment. "How to convince the private sector? There is money in the bank. How to use it? This should be taken into account," Gyawali said.
Similarly, economist Dr Dilli Raj Khanal suggested restructuring the economy and making employee administration result-oriented. He suggested increasing the salaries of employees by 25 percent and emphasized the need to bring a performance-based budget.
Tax expert Dr Chandramani Adhikari suggested not levying tax on annual income up to Rs 1.2 million. Adhikari said, "It is okay to not levy tax on income between Rs 1 million to Rs 1.2 million. When tax rates are low, participation increases. Let's have two tax rates. Let's make the lower one Rs 500,000 to Rs 700,000 and the upper one above Rs 2.2 million. This will reduce the inflation by 60 percent."
The official urged the government to look beyond resource constraints, noting that the cost of living for the lower and middle classes has risen sharply in recent years. Consequently, he argued that tax policies should be structured to offer meaningful relief to these households.
"Inflation trends are identical in Nepal and India. In India, income tax is not levied up to Rs 1.275 million. In our country, income tax is levied starting Rs 600, 000," the official said.
Another economist Dr Prakash Kumar Shrestha recommended linking income tax exemptions to family size and urged for enhanced capacity in project selection.
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