KATHMANDU, June 2: The government’s decision to impose a three percent education equity fee on students enrolled in private schools from fiscal year 2026/27 has reignited a long-running debate over whether education should be taxed and who ultimately bears the cost.
The move has drawn criticism from private school operators, parents, and students, who argue that the new levy will place an additional financial burden on families while unfairly targeting a sector that has become a major pillar of Nepal’s education system.
This is not the first time Nepal has attempted to tax education. Over the past 18 years, successive governments have introduced various proposals to collect revenue from the education sector, only to later withdraw them. In 2002, the government sought to collect a 1.5 percent tax from private schools through the Rural Education Development Fund, but the policy was never implemented.
Now, the three percent tax has once again sparked controversy. Critics say it will increase costs for parents and represents an attempt to “regulate” or discourage private education, a sector estimated to have attracted investments worth around Rs 700 billion. The Ministry of Education and Sports, however, is preparing to clarify the rationale behind the education equity fee included in the national budget.
Private school operators argue that the government should focus on improving educational quality, ensuring uniform standards, strengthening teacher management, and collaborating with private institutions instead of imposing additional financial obligations on them.
They also point out that the manifesto of the Rastriya Swatantra Party, which leads the government, pledged to encourage private investment. According to them, the latest measure runs counter to that commitment.
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Through the fiscal year 2026/27 budget, the government announced a three percent “education equity tax” on fees charged by private schools and colleges. The provision will come into effect on July 17. According to the government, the revenue generated will be used to improve public education, support students from poor and marginalized communities, and promote educational equality.
The announcement, however, has triggered widespread debate among private educational institutions, parents, students, and education experts.
Ramesh Silwal, former president of the Higher Institutions and Secondary Schools Association Nepal (HISSAN), warned that the government’s decision is unacceptable because the burden will ultimately fall on parents.
According to Silwal, private schools already shoulder multiple financial obligations, including a 25 percent corporate tax on profits, a mandatory 10 percent scholarship provision, one percent social security tax, 10 percent house rent tax, and 10 percent municipal tax, among other payments.
Rather than investing in public education through infrastructure development, teacher quota management, and improved service facilities, the government is attempting to weaken private education, he argued.
“The impact of the three percent tax will be felt most strongly in rural areas, where many parents who choose private schools belong to lower-income groups,” Silwal told Republica. “Taxes are meant to be paid by those who earn income. Schoolchildren do not earn, so how can the state justify imposing such a tax?”
Silwal said private educational institutions are likely to launch protests against the decision.
“Organizations such as PABSON, NPABSON, and HISSAN are discussing the issue and may collectively decide not to comply with the tax,” he said. “In Kathmandu alone, there are 87 public schools compared to 650 private schools. Around 88 percent of students study in private schools, while only 12 percent attend public schools.”
Geeta Rana, president of the National Private and Boarding Schools Organization Nepal (NPABSON), said the decision effectively punishes parents who choose private education for their children.
She noted that many students enrolled in private schools come from economically disadvantaged families, including children of daily wage laborers who work in physically demanding jobs. Many of them already rely on the mandatory 10 percent scholarship quota provided by private schools.
“Families that are already struggling below the poverty line are now expected to bear an additional three percent tax,” Rana said. “That is simply unaffordable. Private schools cannot accept such a policy. Discussions are ongoing among PABSON, NPABSON, HISSAN, and other organizations.”
According to Suprabhat Bhandari, former president of the National Guardians’ Federation, the debate is not new. He recalled that the government introduced a 1.5 percent levy on private schools under the Rural Education Development Fund in 2002. Later, in fiscal year 2008/09, then Finance Minister Baburam Bhattarai attempted to introduce an education service tax, which was reduced to one percent the following year. In 2018/19, then Finance Minister Yuba Raj Khatiwada abolished the education tax altogether.
With the government reviving the idea under a new name, the question has resurfaced: Is the education equity fee a step toward a fairer education system, or simply another financial burden for families already struggling with rising education costs?
The biggest improvement is the ending, which brings the story back to the central question and gives it a stronger feature-style narrative arc rather than ending with historical background.
