Kathmandu. KATHMANDU: Economists have stressed on the need of restructuring the tax administration, improvement in public financial management and making the Value Added Tax (VAT) system more effective.

In the meeting, economist Dr. Dilliraj Khanal said that there should be a clear connection between the economic policy and the budget and economic restructuring should be given priority. He stressed the need of linking the issues of policy reform that have been raised since the past with the principles and priorities of the budget.

Economist Khanal stressed the need of taking economic structural reforms and good governance together in the context of Nepal. He stressed the need of preparing long-term restructuring strategy by identifying the primary sectors of economy.

Another expert Dirgharaj Mainali underscored the need for extensive reforms in existing structure of tax administration. Stating that there were structural problems in the tax administration system since long, he suggested that it should be restructured to make it professional and effective.

Mainali stressed on the need of institutional restructuring to make the tax administration more professional. According to him, although some reforms are being made at present, it will take a long time to get the desired results.

Economist Dr. Rupak Khadka said that the effectiveness of the Value Added Tax (VAT) depends on its structure and implementation. He suggested that it would be more beneficial for the economy to implement the VAT system on a single rate on a broad basis as much as possible.

Citing New Zealand’s GST as an example, he said that a comprehensive tax base with limited exemptions was considered effective. Khadka said that although there was a concept of limited exemption in the initial phase in Nepal, the scope of exemption has increased tremendously in recent years. He argued that the single-rate system would be simpler, more transparent and more administratively effective than multiple rates. During the meeting, experts suggested that the fiscal management should be further strengthened by reforming the public financial policy, tax administration and revenue system in the long-term.