Tax and Regulation

The central government is estimated to spend roughly $ 250 million every year.   In order to meeting the total expenditure the government raises money from three areas: taxes, public borrowing and foreign aid.  Of the total expenditure government spends on one third in bureaucracy (recurrent expenditure), and of the rest two third is divided between repayment of principal of the drawn loan, and development of the capital.   

The size of the recurrent expenditure is steadily increased, as a result of the multidecade accumulation of programs that expanded the reach, power and the cost of the government.   Most of the programs government implemented is inefficient. The service it offers is negligible.

The tax account for …. percent of GDP.  The government has aim of raising tax revenue to…..in the FY …… The extraction of ….$....taxes from families and businesses each year comes at an enormous cost. The most obvious cost is that citizens are left with less money to meet their needs for food, clothing, housing, and other items, and businesses are left with fewer funds to invest and build the economy.

In addition, the tax system imposes large compliance burdens and 'deadweight losses' on the economy.   Compliance burdens are the time and administrative costs of dealing with tax system's rules and paper work.Deadweight losses are created by taxes distorting the market economy by changing relatives prices and altering the behavior of workers, investors, businesses, and entrepreneurs.    Such economic damage increases more than proportionally as marginal tax rates rise.  In particular, deadweight losses rise by the square of the tax wedge between the pre- and post tax income.

Saving is a key source of economic growth because it provides businesses with investment funds they need to expand and modernize the nation's capital stock.   The tax system taxes saving and investment which creates a damaging bias that reduces economic growth.  Also, the tax system   applies different burdens to different forms of savings and investment, thus complicating and distorting economic decision making.

In order to generate more savings, the flat tax system which is famous in the post-Communist East Europe is the best system.   It would reduce taxes on savings and investment.  They would, however, differ in their mechanics and pose tradeoffs with regard to administration, simplicity, and civil liberties.   A consumption-based tax with a low rate would increase incentives for working, savings and entrepreneurship. 

Income tax is 'fundamentally flawed' because of its inefficiency, complexity and unfairness.   The lesser the tax the more vibrant is the economy.

The current world is facing increasingly international tax competition, as globalization is knitting separate national economies into a single world economy.   That process is occurring through rising trade and investment flows, and greater labor mobility, and rapid transfer of technology.  As economic integration increases, individuals and businesses gain the freedom to take advantage of foreign economic opportunities.   Individuals have more choices about where to work and invest, and businesses have more choices about where to locate production, research and headquarters facilities.

Taxation has an increasing impact on investment and location decisions. As a result there is rising pressures on countries to reduce tax rates to avoid losing their tax bases.   International 'tax competition' is increasing as capital and labor mobility rises.

High tax rates are more difficult to sustain in the new competitive global economy.    That is particularly true for taxes on capital income, including taxes on business profits, dividends, interest and capital gains.  Taxes on capital income create an increasing drag on growth as capital mobility. High taxes on capital income both reduce domestic savings and investment and drive out foreign capital, with a negative impact on productivity, wages and incomes.

Freedom of the Media

We oppose government control or ownership of any medium of communication. Therefore we support the following: the repeal of all laws prohibiting, licensing, regulating, taxing, or subsidizing the production, sale, or advertisement of any books, magazines, newspapers, and films; the abolition of media regulatory agencies, such as the Canadian Radio-Television and Telecommunications Commission; the sale of such agencies as the Canadian Broadcasting Corporation and the National Film Board to private enterprise; constitutional guarantees of free speech which would apply to all communications media; and the development of an objective system of law defining individual property rights to "air waves"

Freedom of Association

We support the right of individuals to join voluntarily, or to refrain from joining, any association, club, society, or other organization.

Freedom of Religion

We defend the right of individuals to engage in any religious activities which do not violate the rights of others. In order to defend religious freedom, we advocate a strict separation of church and state. We oppose taxation of church property for the same reasons we oppose all other taxation.

Freedom of Speech and Assembly

Government should not censor.  Government should restrict to promulgate laws which restrict individual freedom to conduct public demonstrations, speeches, or exhibits, or to canvass for any reason. Abuses in any of the above-mentioned areas can be dealt with through laws such as the laws of contract and laws prescribing trespass, destruction of private property, fraud, and assault.

Every single individual has right to assemble.   Freedom of assembly is the freedom to associate with, or organize any groups, gatherings, clubs, or organizations that one wishes. It is held is a key right.  Individuals may form or join any political party, special interest group, without compulsions and/or government restrictions.

Freedom of speech is the right not confined to verbal speech but understood to protect any act of seeking, receiving and imparting information or ideas, regardless of the medium used.

Freedom of Contract

We believe that governments should not impose any contractual stipulations on any personal arrangements such as marriage, divorce, inheritance, or adoption. Any type of voluntary, personal contract must be eligible for protection by law.

Land Use
The activity of land use planning is properly the responsibility and right of the owner(s) of the land. We therefore urge an end to all government interference in the planning process through such methods as expropriation, zoning laws or building codes, regional planning, or the acquisition of land or other real property with tax money. We call for the repeal of all laws regulating the use of private property.
Right to Privacy

We oppose covert government surveillance of individuals, where such surveillance violates the personal or property rights of any individual. Any national census or other government compilation of data on individuals, groups, or corporations must properly be conducted on a strictly voluntary basis.

© 2008, Limited Government (Nepal), PO Box 8973, NPC 191, Kathmandu, Nepal
LGNepal is a tax exempt, an independent, non-partisan and non-profit public policy think tank