It is disheartening that the government is sitting on over Rs 274 billion in unpaid revenues and disputed tax claims at a time when it keeps saying it does not have enough resources. Due to this, the authorities often cut spending and delay payments. Of this huge amount of arrears, almost Rs 95 billion is just unpaid taxes, fines, and charges. The other Rs 180 billion is tied up in disputes in tax offices or courts. All this revenue and tax money should have reached the treasury. It's pretty obvious that the revenue problem isn't just because the economy's slow; it's also because authorities are not doing enough to collect these arrears. They are taking too long to make decisions and have not applied tough measures against tax evaders. To address such a serious situation, the government needs to move quickly, be strict and keep at it to collect all revenue and tax arrears. If they take too long in recouping arrears, it would only allow the situation to pile up. Officers who are in charge but sit idle or try to write off taxes without good reason should be warned of dire consequences. If honest people pay their taxes on time, but loads of revenues stay unpaid for years, citizens will lose trust in the system.
The numbers show how much worse the tax collection system is. Last year, the government could only collect around Rs 8.71 billion of taxes, despite targeting Rs 22.76 billion. That's not even 40 percent. Regarding the collection of VAT amounts, they collected Rs 10.33 billion out of a target of Rs 16.33 billion. On disputed claims, income tax settlements reached about 78 percent, while VAT settlements even crossed the target. This mixed record shows that progress is possible when cases are handled proactively.Things are not looking better this year either, as authorities have only managed to collect about 82% of our revenue target in the first four months of the current fiscal year. It showed Rs 34.73 billion still in arrears. All these unpaid taxes and legal battles are making yearly goals seem impossible. Sure, some disputes look genuine. Taxpayers do have the right to challenge assessments they see as unfair. Section 96 of the Income Tax Act requires timely declaration and payment, and anything unpaid becomes arrears. Yet not every dispute is about fairness. Many are used as delay tools. It is in this area that strong policies are required. In the first place, the tax authority should establish strict timeframes for settling any disputes at all levels.
Long reviews for years negate the efficacy of justice. Second, interest and fines for non-payment over a long period ought to be strictly applied without exception. Waivers ought to remain exceptional and well-excused, not routine conveniences. Third, the government ought to publish sectors that owe a lot, not for shaming. Internal discipline is also a matter that requires focus. When the recovered amount is not pursued or files are parked due to pressure, the whole process becomes weakened. Audits for pending cases and tying performance to recovery results might assist. Online monitoring for arrears and disputes can reduce discretion and keep things in motion. There is no lack of taxation laws in Nepal. There is a lack of action on timetables. It is easier to get what is already due. Taxing new revenues is unnecessary. The Rs 274 billion languishing in arrears and disputes would suffice to build roads, educate children, and provide health care. The government needs to switch from tolerance to action. Then the talk of revenues will match with realities.