• Govt-tabled bill gives 85-90 percent of income generated from local resources to the centre

Jul 10, 2017-The first two phases of local elections led to widespread excitement. There is a belief that the new local representatives, the first to be elected in two decades, will finally be able to restore coherence to local development. They are expected to revive democracy at the grassroots, and involve locals in planning for their own future. It is particularly noteworthy that so many members from marginalised communities and women have been elected. This is expected to lead to significant improvements in their participation in governance affairs, as well as in their standard of living. 

The new constitution offers local governments significant control. For example, it empowers them with 22 exclusive rights, including those to collect local taxes to provide education, health, drinking water and other services. 

However, several pitfalls are evident. While much of the nation is exuberantly preparing to exercise the rights to local governance granted by the new constitution, Nepal’s top political leaders are carefully conniving behind the scenes to continue with the centralisation of power in Kathmandu. Leaders from the major parties appear worried that their power might diminish if they grant local bodies too much power. They are thus preparing to pass laws that severely restrict the powers available to local bodies.

A case in point is the Inter-Governmental Fiscal Management Bill, which the government has tabled in Parliament for ratification. This bill severely restricts the funds available to provincial and local bodies. The bill states that 85-90 percent of revenue generated from hydropower, tourism, forests, mines and other sources will go to the centre. Provincial governments will receive only 10 percent and local governments will receive only 5 percent. Some experts on fiscal federalism believe that this is even worse than the Local Self Governance Act (LSGA) of 1999, which provided a larger share of revenue from natural resources to local levels. For example, it states that local governments will receive 50 percent of royalty from hydroelectricity and mines, and 30 percent from mountaineering. 

It would be an absolute travesty if this bill were to pass. As it would mean that Nepal would be a federal state in name only. With the same old political parties at the helm of the state controlling the vast majority of resources, local and provincial governments would have no option but to come to Kathmandu to beg for funds, just like they did in the past state structure. This would lead to the perpetuation of the centralised system of patronage that has existed for a very long time. 

It is time for the newly elected local representatives, as well as members of civil society, to mobilise against this bill. They should demand that the government first form a Natural Resources and Fiscal Commission (as provided for in the constitution), which would be tasked with determining how revenue will be shared. The commission’s proposals should then be widely discussed, and only after that should a bill on this crucial issue be prepared.  

Published: 10-07-2017 08:03

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