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With the coming to power of the left government that now enjoys a two-thirds majority in the federal parliament, as well as effective control over all seven provinces, people were hope­ful that the ruling parties would honor their twin electoral promises of stability and prosperity. But while the government certainly appears stable, its record on prosperity has been repeatedly questioned over the past five months. The central government seems to believe that the remedy to the country’s economic woes is higher taxes, which is why the new budget increased taxes across the board. Everything from cars to liquor to daily edibles are now dearer, the rise in their prices directly or indi­rectly attributable to tax increases stipulated in the budget. The sev­en provincial governments, on the other hand, believe the center has shortchanged them in revenues and are devising their own formulas to collect more taxes. There is thus a lot of duplication in tax collection, which in turn is making the lives of Nepalis difficult.

The federal government for instance recently imposed a 13 percent Telecom Service Charge (TSC) on telecommunications and Internet Service Providers, add­ing to the cost of voice calls, text messages, data packages and internet services. This made tele­com and internet services in Nepal one of the most expensive in Asia, even though the left coalition’s elec­tion manifesto had clearly stated that free and widespread availability of internet would be one of its cen­tral goals. This year’s budget also broadened the scope of the Value Added Tax (VAT), much to the cha­grin of small businesses.

Why pay?

“We had people from the tax office coming to tell us that we needed to register with VAT soon,” says a beauty salon owner in New Road who didn’t want to be identi­fied as she feared being accused of cheating on taxes. “We are regis­tered under PAN and pay our taxes regularly. I don’t understand why a small business like ours needs to register with VAT too.” (The new budget had listed beauty salons, among other small businesses, to be registered under VAT.)

“There is no point in paying extra taxes when we’re not getting any­thing in return,” she says. “Look at the pathetic state of New Road. Basantapur is still under con­struction, we get waterlogged when it rains and we have run out of parking spaces. So what do we pay the taxes for?”

Likewise, an IT firm owner in Kathmandu, who also declined to be named, believes the current gov­ernment is not friendly towards entrepreneurs. “The government seems to have no idea how much income IT companies generate for Nepal from abroad,” he says. “IT professionals can work in any part of the world yet we’re still trying to work in our own country and create new jobs here. But the government keeps discouraging us.” H clarified that his laments were based on the recent increases in internet charges, the imposition of VAT on IT compa­nies and the ban on cryptocurrency.

As the taxes are now levied under three levels—federal, provincial and local—common folks feel the tax bur­den on them has greatly increased. Provinces, metropolitans and rural municipalities have started their own taxes and are increasing local service charges. For instance, having a birth certificate made will now set you back by up to Rs 1,000 when earlier it used to cost next to nothing.

Storm brewing

At present, all provinc­es except Province 4, the Gandaki province, are in conflict with the central government over taxes. Province 1 has intro­duced taxes on exports of 207 different mate­rials to other provinc­es. Provinces 2, 3 and 6 have introduced 0.5 per­cent “Natural Resourc­es Tax” on the export of stones, crushed stones, sand, slate, grav­el and also cement and clinkers produced under its jurisdiction.

Province 5 has passed a man­date to impose a tax of between Rs 160 to Rs 320 on Indian vehicles plying within its jurisdiction. At the same time, province 7 has introduced extra taxes for regis­tration and renewal of business firms under the “Province Develop­ment Tax.” Industries and business­es are feeling the pinch, and again their added costs are being passed on to the final consumers of their goods and services.

The federal government claims that the provinces cannot arbitrarily charge ‘unconstitutional’ taxes, and any such taxes would be summarily scrapped.

“We are aware of the various taxes provincial governments are levying and we have already taken mea­sures to control them,” says Shishir Dhungana, revenue secretary at the Ministry of Finance. “The pro­vincial governments have the right to manage their own finances but they must follow certain rules and guidelines. They cannot go against the constitution.”

Making them pay

Such conflicts of interest between different tiers of government are increasingly coming to the surface. When provinces 1, 3 and 4 intro­duced ‘District Export Tax’ on for­est, agriculture and mine products, the central government had to write to them, informing that such taxes violated the constitution. But in most cases the provincial govern­ments have refused to withdraw their taxes.

“The constitution gives the provin­cial and local governments the right to levy taxes as per their needs. But some local and provincial govern­ments have introduced extra taxes on their own,” says former finance secretary Shanta Raj Subedi. “It is the central government’s duty to make sure that the taxes don’t over­lap. Moreover, the mechanism of levying and collecting taxes should be scientific, practical and coordi­nated.” Only then, says Subedi, will people have faith in their tax system and will actually be inclined to pay timely taxes.

The mighty federal government of KP Sharma Oli has over the five months of its tenure been repeatedly accused of authoritarian tendencies. In the eyes of many observ­ers, this was evident in the way the prime minister tried to consolidate all powers in the PMO, the manner in which the government strove to ram through a watered down medical education bill in parliament, in its ban on popular protest sites and in arbitrary detention and harassment of prominent public figures. Yet the past one week has also shown why it is not easy to impose an authoritarian rule in Nepal these days. After resolutely standing its ground against Dr Govinda KC for over three weeks, the government was forced to come back to the negotiating table after widespread criticism of its handling of Dr KC’s fast-unto-death. Likewise, the Minister for Law and Parliamentary Affairs Sher Bahadur Tamang was compelled to resign after an uproar following his misogynistic comments against Nepali women studying medicine in Bangladesh. The gov­ernment is also increasingly under pressure to come clean on its prolonged inaction on vital issues.

These are signs that when civil society leaders and mainstream media support a popular cause the government is forced to take heed. In fact, following the 2006 change, there has been a steady growth in the role of indepen­dent civil society and free press. They are able to shape public opinion as never before, and the government ignores their advice at its peril. Interestingly, the role of the main opposition, Nepali Congress, has been as meaningful in recent developments.

Even though Congress is now an enfeebled opposition numerically (with just 63 seats as opposed to the ruling communist party’s 174 seats in the federal parliament), it was nonetheless able to bring the federal legislature to a standstill to forestall the government from watering down the afore­mentioned medical education bill. The main opposition, with the help of its many sister organizations, was also able to build pressure from the street.

Prime Minister Oli and his entourage are finding out that however powerful the executive in Nepal there are now potent checks against its tendency to abuse power. On another day, such checks may lead to political gridlock and government inaction. But right now they are playing a vital role: reminding the executive organ of the limits of its power.

In the bright scorching sunlight, Lal Lama, 40, sits on a wooden bench outside his small tin house in Radhe Radhe in Thimi, Bhak­tapur. There, he runs a small tea shop. Lama said he had been feeling uneasy as incessant rainfall on July 11 and early July 12 hammered his tin roof. At around 5:15 am on July 12 he was in his shop with his two kids and attending to his customers when he noticed water from the road outside had started seeping in. In a matter of five minutes the water level in his shop rose to around five feet. “My kids started to float and I found myself drown­ing,” says Lama. “Fortunately, I was somehow able to save all my family.”

Lama is one of the many victims of the flood that hit Bhaktapur on the morning of July 12. Following the nearly non-stop rains on July 11 and 12, the Hanumante River—as well as some of its tributaries—had broken its banks and by the time water subsided, three people were dead and damages worth around Rs 120 million had been incurred, according to the Bhaktapur District Administration Office.

There was no time for Lama to take out any valuables from his shop or from his little adjacent room. He gets goosebumps think­ing of what would have happened had the flood hit his shop at night. Nonetheless Rs 60,000 worth of goods were damaged.

Government officials later visited his shop, like they did many others after the incident and asked about the losses. Lama said they made no promise of compensation. Nor does he hope for it.

His fridge that stored cold drinks has not worked since. When Lama was finally able to enter the shop after three days of the incident, there was mud everywhere and a pungent smell of decay.

Lama’s family has had a tough time of late. His family had also lost a lot in the 2015 earthquakes. At that time, he was in his home­town of Kavre. Though none of his close family members were killed, the earthquakes had completely razed his house and damaged all his valuables. He got Rs 300,000 in compensation from the government but was nearly not enough. It had only been a month since he, his wife and two children had shifted to Kathmandu valley, hoping for a better future. “Now, we are again in misery,” Lama rues.

Just beside his shop is a small wood factory that was also severely affected by recent floods. The work­ers said that five days after the floods most of the woodworks were now fine but four electrical appliances, costing Rs 50,000 each, were not working anymore.

Umer Thakur, 35, who is originally from Rautahat, told us that even though it had been raining heavily on July 12, it was otherwise a normal day. “But suddenly water burst in out of nowhere and brought down a wall of the factory and submerged everything,” he says. Some govern­ment officials came to talk to him about compensations but he does not expect anything.

After a five minute walk from Thakur’s factory, we reach a rice fac­tory where there is a very unpleas­ant smell of decaying rice. Heaps of wet dirty rice are lying inside.

Nearby, there is a small mattress factory where workers are sitting idle and talking to one another. None of their machines are working and they do not know when work will resume or if the machines can at all be repaired. Outside, water dripped from their wet mattresses.

We can see personnel of another big electronics company trying to salvage what remained of undam­aged goods. None of them wanted to talk about the incident or disclose the amount of loss incurred.

Then we meet Kamal Khadka, 50, who runs a small hardware store. He is now busy searching for his lost goods. He laments that he could not save anything when water sudden­ly entered his shop. He estimates around Rs 130,000 of losses.

Khadka, who has previously served in Nepal Army for 18 years, too said that though the mayor came to his shop to inquire, he does not expect any compensation. “I had not expected this. My wife and I ran to my relative’s place when water started coming into our shop. If it had been at night, I am sure many of us would have died.” He is glad that his family is now safe. But his wife, Sharmila Khadka, 40, has been suffering from severe headaches since the day.

A Bhaktapur municipality person­nel, who didn’t want to be identified as he was not authorized to speak on the matter, informed us that they are still calculating damages so that timely compensations can be provided. “Applications indicating the amount of losses are pouring in. Once all applications are in, every ward of Bhaktapur would hold a board meeting and the victims would then get their com­pensations,” the municipality per­sonnel informed.

Above all, this incident sheds light on Bhaktapur’s unpreparedness for any kind of emergency. It is horri­fying to think that the July 12 flood­ing, with water rising to five feet, was relatively small. Locals ruefully note that the rainy season is far from over.

The ruling Nepal Communist Party (NCP) and the main opposition Nepali Congress are on a collision course. The NCP leaders accuse their Congress counterparts of rank opportunism—Congress did precious little on medical education reform when it was leading the government, the accusation goes, but has overnight morphed into an ardent advocate of the fasting Dr Govinda KC. The other accusation is that Congress is trying to subvert the authority of a demo­cratically-elected government by obstructing parliament and protesting in banned areas. They argue that five months are nearly not enough to judge this government.Congress leaders contend that they cannot be mute spectators even when the government has put the country on a slippery slope to full-blown authoritarianism, by for instance declaring popular protest places as ‘no go’ areas and by empowering the ‘medial mafia’ by watering down the medical education ordinance brought by the previous Con­gress government. There are other bones of contention too. The constitution requires that speaker and deputy speaker of the federal parliament and well as the seven provincial parliaments be from different parties, but in six of the seven provinces NCP holds both the positions. The appointments to constitutional bodies made by the previous Congress gov­ernment have been cancelled and social security measures it introduced rolled back—and hence the current standoff.

But what will these protests by opposition parties led by Congress—with Baburam Bhattarai’s Naya Shakti even asking for Prime Minister KP Oli’s resignation—amount to?

“It is true that the performance of this government has been disappointing thus far,” says political analyst and former chief election commissioner Bhojraj Pokharel. “But I also don’t think there are enough legitimate grounds for resignation.”

Pokharel credits Oli for trying to bring a “semblance of order” in governance, something that has been missing in Nepal since the 1990 change, “but the way the government has gone about achieving this order is wrong.”

But does he see enough reasons to fear autocracy? “The tendency is there. The biggest cause for concern right now is that the executive has become extremely powerful while the two other organs of the state are weak. This in turn has desta­bilized the principle of check and balance,” Pokharel replies.

Ominously, with the ruling communist party all-powerful and the main opposition in Nepali Congress at its weakest historically, they have no incentive to listen to one another.