Reforms Sans Principles [EDITORIAL- September 2001]

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 Reforms Sans Principles [EDITORIAL- September 2001]

The government anounced land reform measures without first establishing its ownership right over land, which is now owned by individuals who hold title documents that are officially called "Land Ownership Certificate Documents" (Jagga Dhani Praman Purja). If the government can accquire such property, people's fear that it will also accquire other personal properties in the same manner was only natural. Had Prime Minister Deuba been really serious with land reforms, he should have first nationalized all the land. Moreover, as it was the Prime Minister himself who first triggered the fright that lead the people to withdraw money from banks, the Prime Minister himself should clarify his initial anouncement. The clarifications by the Finance Minister or the Governor of the Nepal Rastra Bank donot carry the necessary weight to deny something that Prime Minister's announcement has indicated.

Though the Supreme Court has in a recent verdict chastised the Prime Minister by clearly indicating the Prime Minister's speech cannot change an existing law, this episode has also raised the doubt about the philosophical conviction of Nepali Congress which was, after 1990's, regarded as committed to economic reforms that went along the lines of modern capitalism. Instead of reforming other laws that posed bottlenecks in natural functioning of market forces to bring about a sustainable equilibrium between demand and supply of goods and services and also of the land as a factor of production, Nepali Congress now has embraced an obscure medieval policy that is solely based on egalitarian principles proven irrelevant in this 21st century.

Had the Government really meant a revolution, it should have gone for a capitalist revolution by imposing such a taxation system on agriculture that would force the landed property- holders to automatically dispose off such property, thus making land available for those who think they will be able to make a better use of it. It would release the idle capital from land to industries or other activities. The same system of taxation could have been extended to urban property, so that all the owners of unproductive property would be forced to invest more in income generating activity, thus reducing the size of property held for demonstration. It could have also been more in line with the ideas of taxing all sources of income as included in the new Income Tax Act currently under consideration of the parliament. In fact, one simple correction in the proposed Income Tax Act to bring agricultural income too under the income tax net would have served many of the objectives of this so-called revolutionary land reform.

Looking at the same thing from a different angle, it seems that the government is serious neither in land reforms nor in tax reforms. Repeated reduction on land holding ceilings is no way going to solve the problem of landlessness for ever. Moreover, if the purpose of the new Income Tax Act is to tax all incomes irrespective of source, why the exemption for agriculture?

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