Auditor General’s report
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Recurrent spending spikes, capex rising steadily
KATHMANDU, April 12: Misuse of taxpayer money, lack of transparency and poor management continue unabated in public spending while any improvements and reforms that have taken place are negligible, according to the Office of the Auditor General.
The 53rd report of the OAG unveiled on Monday has pinpointed a number of spendings and other measures by government agencies that are not transparent, including the spending of Rs 25.55 billion in technical assistance, the tax waiver allowed for the import of different goods, and spending on preparations for the 18th SAARC summit as well as on disaster response. OAG has criticized the government for not specifying the areas of spending in technical assistance recieved from development partners and not providing income and expenditure figures for such amounts.
Speaking at a press meet organized to unveil its report on Monday, Auditor General Bhanu Prasad Acharya said, "Increment in the tax waiver amount has invited serious irregularities."
"Several of the waivers are irrelevant, but the ones that are justified can be continued, such as those provided for construction materials for projects under foreign assistance," he added.
"A total of Rs 2.05 billion was spent on the SAARC summit of November 2014, but the procurements were made at the last hour without any competitive bidding or transparency, although the procurements could have been done in time as the summit dates were decided some eight months beforehand; the costs would have been significantly lower," said Baburam Gautam, spokesperson of OAG. The goods purchased for the summit were supplied after three months, OAG has disclosed.
Auditor General Acharya took much time to point out the irregularities. He also said reform interventions were foiled, But he had very little to share about any reforms in the spending of taxpayer money.
Unaccounted expenditures increased by Rs 56.65 billion to total Rs 328 billion. The increment is 46 percent this year. Unsettled advance payments are also of the same percentage.
OAG has likewise pointed out misuse of Value Added Tax waiver on the import of relief materials by importers and traders. It likewise said the government's disaster response was ineffective.
Acharya has suggested that the government should use money from different idle funds such as the Foreign Employment Welfare Fund and the Social Security Tax Fund on appropriate development projects. These funds have in total a cash reserve of Rs 65 billion in different bank accounts. "Government collecting funds through domestic borrowing and its attempt to look for foreign sources is contradictory given the availability of reserve funds in its own treasury," said Acharya.
OAG has also taken exception to the work of the Tax Settlement Commission, which settled disputed outstanding dues worth Rs 9.55 billion last year. "Taxes had been settled through mutual understanding without any set standards although there are other agencies to review tax related disputes," said Acharya.
He further said, "The Tax Settlement Commission is irrelevant after the endorsement of the provision on self-declaration of taxes and also given the legal and institutional management for reviewing disputes on tax-related issues under the Income Tax Act." The Commission had a mandate for bringing tax cases from the courts and many experts had raised eyebrows over this at the time. The commission was formed as per the Tax Settlement Commission Act 1976.
OAG has asked the government to provide it with the commission's report but government did not do so. Acharya said that the Ordinance to Amend the Public Procurement Act 2007 had envisaged reforms in public procurements but unfortunately the ordinance was not endorsed by parliament, leading to uncertainty in reforms. "I don't know why it failed to get through parliament," he said.
There were some reforms such as the treasury single account, under which all payments are managed in an integrated manner.
OAG also submitted its 53rd report to President Bidhya Devi Bhandari. The report will later be tabled in parliament.
