- Nepal’s Constitutional Court has issued a stay on the laws that require community forest user groups to pay taxes to the local, provincial and federal governments, which are seen as unfair and contradictory to the constitution.
- Community forest user groups manage about 34% of Nepal’s forested area under a participatory conservation model that has been praised for increasing forest cover and empowering local communities.
- The petitioners argued that the taxation system violates the constitutional provision of balance between development and environment, and that only the federal government can determine taxes for community forests.
- The court ordered the government not to implement the taxation laws until a final verdict is passed, and the user groups hope that the court will rule in their favor.
KATHMANDU — Nepal’s constitutional bench has issued a stay on the implementation of laws making it compulsory for community forest user groups across the country to pay taxes to the local, provincial and federal governments under different names.
The order comes as community forest user groups took to the streets demanding an end to the “triple tax” system, which emerged after Nepal became a federal republic with seven provinces following the promulgation of the new Constitution in 2015.
“A verdict is yet to be passed in the case. This is just an interim order,” lawyer Dilraj Khanal, one of the petitioners in the case, told Mongabay.
In Nepal, more than 22,000 community forest user groups manage around 34% of the country’s forested area. Under principles pioneered by Nepal in the 1970s, each community manages its forest for its own use based on an operational plan approved by the divisional forest officer, a representative of the (now provincial) government.
As part of the program, launched with the primary objective of reversing deforestation and protecting existing forests, communities are allowed to collect wood up to a limit prescribed by the government based on the availability of wood and the condition of the forest. The program has received worldwide acclaim for being the driving force behind the country’s success in increasing its forest cover from 25% to 45% of its total area.
The petitioners held that the matter falls under the list of concurrent powers of the federal and provincial governments and as per Article 60 of the Constitution of Nepal, and only the federal government can determine taxes that community forestgroups need to pay to the government.
They also stated that different laws formulated following the promulgation of the Constitution contradict its provisions. For example, the local government act states that user groups need to deposit 10% of their revenue with their municipality or rural municipality. The Value Added Tax Act also states that the government shall impose VAT on wood sold by the user groups. Similarly, different provinces have enacted their own forestry legislation to make it compulsory for forestry user groups to pay taxes to the provincial government.
The Federation of Community Forestry Users Nepal (FECOFUN), an association of user groups across the country, has been protesting against the tax regime for a long time. Although government representatives had assured user groups that the taxation system would be revised, it hasn’t done so thus far. This prompted FECOFUN to move the Supreme Court.
Before the promulgation of the new Constitution, community forest user groups only paid taxes to the central government, as the old unitary Constitution didn’t envisage provinces and such revenue collecting power to municipal governments.
Even the constitutional bench, which hears cases related to important constitutional matters, was set up following the passing of the new Constitution. Under the old Constitution, such cases would be heard by the Supreme Court itself.
The bench comprising Chief Justice Bishowmbhar Prasad Shrestha and justices Ishwor Prasad Khatiwada, Ananda Mohan Bhattarai, Prakash Kumar Dhungana and Sushma Lata Mathema held the the provisions in the laws, if implemented, stand to raise obstacles in the functioning and management of community forest user groups. It ordered the government not to implement the laws related to the taxation of community forest user groups until a final verdict in the case is passed.
“We demand that the government make necessary legal changes so that forest user groups pay taxes only to one authority,” lawyer Khanal said. “We hope that the Constitutional Court passes its final verdict along those lines,” he added.
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