16th January 2025, Kathmandu
Kathmandu Metropolitan City (KMC) has strongly objected to remarks made by Bagmati Province’s Minister for Internal Affairs and Law, Suraj Chandra Lamichhane. The minister had accused KMC of failing to transfer revenue owed to the province. KMC described the statement as misleading and lacking a factual basis.
KMC Rejects Minister Revenue Claims
Minister’s Allegation Sparks Controversy
During a program in Kathmandu on January 15, Minister Lamichhane claimed KMC had not transferred 40% of its revenue to the provincial government as required by law. He also accused the city of coordinating with the province only when requesting a budget.
In response, KMC issued a press release signed by Assistant Spokesperson Dhruva Kumar Kafle. The statement said, “This claim is irresponsible and ignores the actual context of revenue-sharing procedures.”
Revenue Collection and Sharing Clarified
KMC explained that it adheres to the revenue-sharing framework outlined in Bagmati Province’s Economic Act for the fiscal year 2081/082 (2024/25). The Act mandates local governments to collect entertainment taxes and share 40% of the revenue with the province.
Between July 17, 2024, and January KMC collected NPR 31.3 million in advertising and entertainment taxes. Of this, NPR 18.83 million (60%) was retained by KMC, while NPR 12.56 million (40%) was allocated for the province.
“We have already decided to transfer the provincial share. The minister’s statement exaggerates the situation and is factually incorrect,” the release added.
Lower Tax Rates Reduce Revenue
KMC highlighted a reduction in tax rates introduced by the Economic Act, which has negatively impacted its revenue. It said that although the rates are lower than in previous years, the city remains committed to fulfilling its financial obligations.
Constitutional Principles Must Be Respected
KMC emphasized the importance of constitutional cooperation among Nepal’s three levels of government. It reminded all stakeholders to follow principles of coordination, coexistence, and mutual respect while exercising their authority.
“The constitution prioritizes inclusivity, equality, and federal governance. Making baseless accusations violates these principles and erodes accountability,” KMC stated.
Call for Constructive Leadership
The city also criticized the provincial government for neglecting pressing issues such as bureaucracy, education, healthcare, and infrastructure development. It urged the province to focus on solutions instead of making unfounded claims.
KMC expressed disappointment over the lack of constructive leadership and called for stronger collaboration between the city and the province.
Commitment to Governance and Transparency
Despite the challenges, KMC reaffirmed its commitment to adhering to legal and constitutional provisions. It pledged to maintain transparency in its operations and prioritize public welfare.
This dispute underscores ongoing challenges in Nepal’s federal system, especially in revenue-sharing mechanisms. KMC called on all governments to work together for effective governance and sustainable development.
For more: KMC Rejects Minister Revenue Claims