Answer To: SWM613 Public Policy Perspectives Policy Report marking guide Name: Overview of policy problem and...
Shanaaya answered on Aug 27 2020
Public Policy In Nepal
2018
[Public Policy In Nepal]
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Executive Summary
In this report, we would be highlighting and discussing the public policy which is placed in the Nepal country. We would be evaluating the strength and the weakness of the public policy which would be understood from the perspective of the Nepal (Acharya, 2016). Our present taxation system is very complex and ambiguous, there Is a lot of chances of corruption under this regime which leads to distrust of government. In this paper we would be evaluating the background, strengths, weakness, and threats of the VAT policy and later on would be discussing the implications and the component of it.
By definition, VAT is the value added tax which is applied to the sale or purchase of the goods. It helps in taxing the users and the end purchasers to enhance their comprehensive stages of application of the Tax regime within the Nepal country. Through the VAT application it has eased out our system and any avid implications can be challenged (Basnet, 2016). VAT will add value at each stage and will wave off the rates both at the state and at the central level. VAT will not only increase the efficiency of taxation system but also improves the economic growth and the whole nation will be covered under national market
In the end, we have drawn a conclusion which would be understood from the perspective of the Nepal framework and how the country is able to reap advantages or disadvantages due to the VAT applications. Hidden taxes are imposed on exports, whereas no tax is imposed on Importing of Goods/Services from one state to another (Ghimire, 2016).
Hidden taxes are imposed on exports, whereas no tax is imposed on Importing of Goods/Services from one state to another (Nayak, 2016). Just to overcome these issues, we want to introduce a VAT bill, which will not only bring transparency to the taxation system so that consumer will get to know the tax amount of taxes they are paying to the government
Introduction
The Taxation system of Nepal includes VAT (Value Added Tax) which is also called a sales tax. It is one of the indirect taxes which is paid on the sale of goods (Debrah, 2016) A new taxation system which is being applied in other countries as well that is (VAT) Goods and Services Tax is far better in many terms. We can bring a major reform to our policy by introducing VAT in our taxation system (De Quatrebarbes, 2016).
VAT is an indirect tax which is to be imposed on the supply of goods and services. It would be one tax for the entire country. VAT is a comprehensive, multi-stage, that will be levied on every value addition.
Background
The Value Added Tax (VAT) bill is expected to have a bulk impact on the complicated taxation system in the country (Acharya, 2016). However, it is most likely to benefit the manufacturing sector especially the FMCG, Auto, and Cement where the tax rate would be around 24% which previously was 24 to 38% in VAT regime. the services sector is expected to be adversely affected by VAT (Sanna, 2016).
The VAT will not only increase the tax to GDP ratio but also give financial support to the government for increasing the capital expenditure. The unorganized sector like electrical, paints, hardware can also be brought under the VAT bill. However, It is easier said than done. It requires a lot of planning in implementing the VAT reform for covering the unorganized sector under its umbrella (Basnet, 2017).
VAT will be levied on these value additions which are added at each stage to obtain the final value to the end customer. By merging all the Central and State taxes into a single tax, it will not only wave off the cascading effect but also it will open the doors for a common national market. VAT will add value at each stage and will wave off the rates both at the state and at the central level. VAT will not only increase the efficiency of taxation system but also improves the economic growth and the whole nation will be covered under the national market (Belay, 2015).
Our present taxation system is very complex and ambiguous, there Is a lot of chances of corruption under this regime which leads to distrust of government. Just to overcome these issues, We want to introduce VAT bill, which will not only bring transparency to taxation system so that consumer will get to know the tax amount of taxes they are paying to the government (Tiwari, 2016).
Discussion on Value Added Tax policy
The manufacturer who makes bread will buy the raw material for making bread (flour, sugar). The value of the sugar and flour will increase when they are produced into bread (Ghimire, 2017).
The manufacturer will then sell the bread in large quantities to the company who packs the bread and labels it which will again increase the value of the bread. This company will then sell bread to retailers. The retailer will finally add their margins and sell the bread to the consumer. These are called the value addition (Lawoti, 2015)
VAT will be levied on these value additions which are added at each stage to obtain the final value to the end customer. By merging all the Central and State taxes into a single tax, it will not only wave off the cascading effect but also it will open the doors for a common national market
Following are the list of taxes which can be removed by applying VAT in our taxation system (Nayak, 2016)
· Central Excise Duty
· Duties of...