The committee, headed by the chief of Finance Ministry’s Revenue Division, handed over its final recommendations for the budget to Finance Minister Ram Sharan Mahat on Monday.

A source said the recommendation to form a reform mechanism is an “old suggestion”, while the tax clearance commission is a new idea.

The committee called for a tax clearance commission to study individuals and firms that have yet to clear tax dues. “Many individuals have not paid taxes due to various problems, while others are forced to pay penalties,” said a committee member. “The proposed commission will study such individuals and firms, recover taxes, and provide certificates.”

Inland Revenue Departme-nt (IRD) Director General Tanka Mani Sharma said the government is yet to recover taxes worth Rs 45 billion. “Of the total, Rs 22 billion is under the consideration of the court, while the IRD has to recover Rs 23 billion,” he said.

Sharma, however, said no discussions have been held on the tax clearance commission. “The recommendation was made for tax system reforms,” he said. However, private sector representative, who were present at the meeting, confirmed the committee’s recommendation. “This is a positive move as it will help people who are willing to pay tax, but are facing some legal problems,” said a private sector representative.

According to Sharma, there are 110,000 individuals and firms who have not cleared taxes due to various reasons for a long time. The government has been adopting various mechanisms to raise unpaid taxes. “Setting up a tax clearance commission is also in practice in other countries,” added Sharma.

Finance Minister Mahat has also been holding discussions on the matter at various levels.  However, a leader of the CPN-Maoist suggested seeking all-party consensus to form a commission on tax clearance.