The government has presented new taxes as a necessary step to stabilise the national budget, provide sufficient funding for public services and support social equity. At first sight, the justification seems reasonable. However, good policy implementation should not place additional burdens on citizens. Imposing VAT on electricity consumption beyond 50 units and introducing a 3 percent levy on fees charged by private schools and hospitals may well create extra financial pressure on ordinary citizens already struggling with rising prices. The new electricity tax is particularly difficult to justify. The government has consistently promoted hydropower as the backbone of the economy. Successive governments have encouraged people to reduce their dependence on imported fossil fuels and increase their use of locally produced electricity. Citizens have been urged to adopt electric cooking appliances, electric vehicles and other energy-efficient technologies. The decision to impose a tax on electricity consumption has therefore come as a shock. While the government argues that households consuming more than 50 units are relatively better off, the reality is that many middle-class families easily exceed that threshold through ordinary daily use. This level of consumption is no longer a luxury but a necessity. Instead of encouraging greater electricity use to absorb growing hydropower production, the government appears to be discouraging it through higher costs. If Nepal is serious about becoming an energy-driven economy, policies should reward households for adopting electricity rather than penalise them for doing so. At a time when cooking gas supplies appear uncertain and international prices remain volatile, water-resource-rich Nepal should focus on expanding electricity consumption and reducing dependence on imported fuel.
NC, RJPN instruct their local body chiefs against imposing high...
The government should also remember that imposing new taxes on electricity, which is used by more than 95 percent of households, will increase the cost of goods and services across the economy, putting additional pressure on household incomes. Equally concerning is the introduction of a 3 percent levy on fees collected by private schools and hospitals. The government says the revenue will help improve public education and healthcare, particularly in underserved areas. While that objective deserves support, the chosen mechanism is problematic. The immediate impact will likely be higher fees for students and patients. Private institutions rarely absorb additional costs themselves; instead, they pass them on to consumers. Parents already face substantial educational expenses, while healthcare costs continue to rise across the country. Another levy may seem small in isolation, but for many households it will translate into thousands of rupees in additional annual expenses. Moreover, taxing education and healthcare sends the wrong signal. These are essential services. If the government wants to improve public schools and hospitals, it should focus on increasing efficiency, reducing waste and making strategic investments supported by broader economic growth rather than placing new financial burdens on people seeking quality services.
The concern is not limited to these measures alone. Other tax increases announced in the budget could trigger a chain reaction throughout the economy, resulting in higher prices for consumers. Given that economic activity remains sluggish and household purchasing power is constrained, the government should be exploring ways to boost confidence and spending rather than adding to financial pressures.This point is even more important because Nepal is currently governed by a leadership that enjoys both a strong public mandate and considerable political support. Such a government has both the privilege and the responsibility to place citizens' welfare at the centre of its policies. Increasing revenue is one thing, but it should never come at the expense of affordability and access to essential services. The government must take a second look at these policies, consult stakeholders and identify alternatives that balance fiscal needs with public welfare.
