CFUGs launch protests against overlapping taxes

Published On: September 17, 2019 07:29 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, Sept 17: In the wake of separate taxes imposed on community forest user’s groups (CFUGs) by all three tiers of government, the Federation of Community Forest Users Nepal (Fecofun) has announced a nationwide protest starting Tuesday demanding withdrawal of ‘overlapping’ taxes.

Fecofun, the umbrella body of community forest users’ group, said the CFUGs are on the verge of collapse as the local, provincial and federal governments have imposed separate taxes totaling around 65 percent on the user groups. The groups formed to protect forests and use forest resources in a sustainable manner are facing problems due to the heavy taxes imposed on them, according to Fecofun leaders.

Fecofun plans to stage sit-ins at local, provincial and federal forest offices and stop the supply of forest products like firewood and timber until the overlapping taxes are withdrawn.
“Our demand is that the government should withdraw the new taxes imposed on community forests,” said Fecofun President Bharati Pathak, adding, “The taxes are very high and threaten the sustainability of the community forest user groups.” Before the implementation of federalism, the government would levy 15 percent tax on the forest products sold by the community forests. But a few months ago, the Ministry of Federal Affairs and General Administration has allowed the local governments to levy 10 percent tax on the income of the community forests. This tax is on top of the federal tax of 15 percent.

While each such group is required to pay 28 percent tax - including 13 percent Value Added Tax (VAT) - of their total income to the Federal Consolidated Fund, they have been asked to pay 10 percent of their income to their respective local governments as per the Nepal Act Amendment Bill, which has been already endorsed by the lower house.

Provincial governments have also imposed up to 10 percent taxes on the income of the community forests. Of late, two provincial governments — Province 1 and Province 3— have imposed taxes on community forest whereas other provincial governments are planning to do so.

About 22,000 community forests user’s groups are in existence across the country. On an average, a community forest users group earns around Rs 200,000 per year, according to community forest leaders. Fecofun officials said they are not against paying tax to the government, but are against the overlapping taxes. They have demanded that the government agencies concerned address their demand to avoid duplication of taxes.

Nepal’s community forest initiative has helped significantly increase forest cover in the country since it was launched in the early 1990s. A five-year survey conducted by the Department of Forest Research and Survey (2010 to 2014) had earlier showed that Nepal’s forest cover had increased to 44.74 percent, up from 39.6 in late 1990s.

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