By Madan Lamsal

These days, there is a lot of news about revenue officers running behind some prominent Nepali business people. The charge on the poor business people was simple: they produced some fake VAT bills. This was indeed an unbelievable revelation as Nepali businesses selectively employ many Chartered Accountants, lawyers, tax experts and also, former bureaucrats.  Why were all these trained hands supporting the private businesses not able to protect the firms from the clutches of the tax officers ?

Economists sometimes argue that tax officers, tax accountants and tax lawyers don't perform any kind of productive function for the economy. But these economists are wrong in absolute terms. Let's first take the case of tax officers; they are highly productive. Look at the multi-million rupees bungalow of a revenue clerk at the heart of Kathmandu, who indeed had descended empty-handed from the high hills just a few years ago. And, gauge the pace of his productivity -- out of ten thousand rupees salary a month, he could multiple his income at least twenty fold to become so rich in no time.

Looking at the present determination exuded by some of the bureaucrats in tax administration, sworn to take action with tax evaders, one may find it hard to believe that these public servants work hand-in-glove with the private firms. But the recent episode of vowed action is true exception and is sure to evaporate in a couple of

months, if not days, without anything tangible. But the norm is: bureaucrats help the businesses to increase the profitability, and in turn, businesses reciprocate to enhance the productivity.

What could be the better productivity of CAs or tax accountants than helping their client save the tax money? They may call it tax planning, tax saving or tax avoiding, but in effect they help save money. Who on earth can say that saving is not being productive? It is a public knowledge that the best skill of an accountant lies in maintaining the balance in balance sheets. The more the cash balance, the merrier the client. This process, rather than an isolated incidence, duly recognizes the productive ability of CA and consolidates the productivity potential of the saver.

Because, not paying tax is also being highly productive. Even if you do, the amount is sure to go to the pockets of some politicians who sit in Singhadurbar or Baneswore who just eat-up time quarrelling for a chair, instead of being productive. Instead. look at how our business people could be productive out of saved money by not paying taxes. They could set up industries and production units. They can use it for their marriages, perhaps more than one, and increase their productivity. Even their luxury trips help promote value tourism that may include a number of heavenly pleasures, which in essence has to be reproduced or replenished by the tourism industry.

The tax lawyers are even more productive. These are the people who can swing the double-edged swords. They can produce the documents that are helpful for the businesses to evade the taxes at the first place and defend even indefensible if caught by the authorities. Simultaneously, they may be able to provide information to different departments or organizations like Inland Revenue Department, Flying Squad, CIAA, Revenue Tribunal etc, at least for 15 per cent legal commission.

All these analogies must be enough to firmly establish that not to pay tax is being more productive than paying it. Then why not abolish the tax system altogether ?