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A Study on House and Land Tax (Property Tax) in Ghorahi Municipality of Dang District

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A Study on House and Land Tax (Property Tax) in Ghorahi Municipality of Dang District A STUDY ON HOUSE AND LAND TAX (PROPERTY TAX) IN GHORAHI MUNICIPALITY OF DANG DISTRICT A Thesis Submitted to the Central Department of Economics Faculty of Humanities and Social Sciences Tribhuvan University In Partial Fulfillment of the Requirements For the Degree of Master of Arts In ECONOMICS By Dilli Raj Dahal T.U. Regd. No.:- 9-2-29-1776-2007 Roll No.:- 195/067-069 Exam Symbol No.:- 281455 Central Department of Economics Tribhuvan University Kirtipur, Kathmandu, Nepal September 2016 RECOMMENDATION LETTER This thesis entitled A STUDY ON HOUSE AND LAND TAX (PROPERTY TAX) IN GHORAHI MUNICIPALITY OF DANG DISTRICT prepared by Mr. DILLI RAJ DAHAL has completed under my supervision in the partial fulfillment of the requirements for the degree of MASTER OF ARTS in ECONOMICS. I hereby recommend this thesis for evaluation by the thesis communities. ---------------------- Prof. Dr. Sohan Kumar Karna (Thesis Supervisor) Central Department of Economics Tribhuvan University Kirtipur, Kathmandu Date: 2016-08-24 2073/05/08 2 APPROVAL SHEET We certify that thesis entitledA STUDY ON HOUSE AND LAND TAX (PROPERTY TAX) IN GHORAHI MUNICIPALITY OF DANG DISTRICT submitted by Mr. DILLI RAJ DAHAL has found satisfactory in scope and quality as a partial fulfillment of the requirements for the degree of MASTER OF ARTS in ECONOMICS. Therefore, we accept this thesis as a part of the said degree. Thesis Committee ___________________________ Prof. Dr. Ram Prasad Gyanwaly Head of Department ___________________________ Prof. Dr. Kushum Shakya External Examiner ___________________________ Prof. Dr. Sohan Kumar Karna Thesis supervisor 3 ACKNOWLEDGEMENTS This thesis is prepared to fulfill the partial requirements for the Master Degree of Arts Economics, Tribhuvan University, Nepal. Since, it involves intensive study and analysis of the related subjects; it is very effective for the students in skill development as well as career enhancement. This thesis has come in this shape not by the sole effort of me but by the contribution of many individuals and institutions. I am very much grateful to all those people and institutions that helped in completing this thesis directly and indirectly. This study is mainly concerned with a study on House and Land Tax (Property Tax) in Ghorahimunicipality. First of all, I am very glad to appreciate and express my great sense of warm regards and gratitude to my respected Supervisor sir Prof. Dr. Sohan Kumar Karna for his guidance constructive comments and suggestions that gave the final shape of this thesis. I express my special thanks to Head of Department and Research Head, who always encourage, inspired and offered me valuable knowledge, information, ideas and orientation class. I am indebted to all the authors whose books, thesis, articles and research have been consulted during preparation of this thesis. I would also like to express my gratitude to all member of Tribhuvan University campus, especially chief of administration, asst. chief of administration, libraries staffs as well as all known and unknown people who supported as well as inspired me to complete this thesis. I am equally grateful to the Executive Officer of Ghorahi Municipality and Account Officer of Ghorahi Municipality, who have helped me by providing the required latest data, budget pustika, broachers and filling questionnaire for my research work. Finally, I would like to thank my father and mother who inspire to make me here. ..…………………… Dilli Raj Dahal Tribhuvan University T.U. Regd. No: 9-2-29-1776-2007 Campus Roll No: 195/067-069 4 TABLE OF CONTENTS Title Page No. RECOMMENDATION LETTER i APPROVEAL SHEET ii ACKNOWLEDGEMENTS iii TABLE OF CONTENTS iv LIST OF TABLES vi LIST OF FIGURES vii LIST OF ABBREVIATION viii CHAPTER-I INTRODUCTION 1-6 1.1 Background of the Study 1 1.2 Statement of the Problem 4 1.3 Objectives of the Study 4 1.4 Significance of the Study 5 1.5 Limitations on the Study 5 1.6 Organization of the Study 6 CHAPTER –II REVIEW OF LITERATURE 7-14 2.1Conceptual/ Theoretical Review 7 2.2 Empirical Review 8 2.3 Research Gap 14 5 CHAPTER- III RESEARCH METODOLOGY 15-17 3.1. Research Design 15 3.2. Population and Sample 15 3.3 Nature and Sources of Data 15 3.4 Data Collection Procedure 16 3.5 Data Analysis Tools 16 CHAPTER - IV PRESENTATION AND ANALYSIS OF DATA 18-38 4.1 Structure of Total Income from Tax and Others Sources of Ghorahi Municipality 18 4.2 Total Income from House and Land Tax and Total Internal Sources/income 19 4.3 Contribution of House and Land Tax to Total Revenue 22 4.4 Budgeted and Actual Collection of House and Land Tax 23 4.5 Analyze the Trend of House and Land Tax 24 4.6 Empirical Analysis 25 4.7 Major Finding 36 CHAPTER -FIVE SUMMARY, CONCLUSION AND REOMMENDATIONS 39-43 5.1 Summary 39 5.2 Conclusions 40 5.3. Recommendations 42 References 44-45 Appendices 46-51 6 LIST OF TABLES Table No. Title Page No. Table 3.1 Groups of Respondents and Size of Sample for each Group 16 Table 4.1 Structure of Total Income from tax and Other Sources of Ghorahi Municipality 19 Table 4.2 Total Incomes from House and Land Tax and Other Internal Sources/Tax of Ghorahi Municipality 20 Table 4.3 Contribution of House and Land Tax to Total Revenue of Ghorahi Municipality 22 Table 4.6 Group of Respondents and code 26 Table 4.6.1 Number of Registered and Non Registered Property Holders 26 Table 4.6.2 Number of Property Holder Paying and Not Paying Property Holders 27 Table 4.6.3 Necessity of Property Tax 28 Table 4.6.4 Necessity of Tax Awareness Program 28 Table 4.6.5 Modes of Communication of Tax Liabilities 29 Table 4.6.6 Means of Raising Revenue of Local Body 30 Table 4.6.7 Additional Resources 31 Table 4.6.8 Tax Evasion is Major Constraint for Tax Collection 32 Table 4.6.9 Opinion aboutPresent Rate of Property Tax 32 Table 4.6.10 Property Tax collection is Sufficient or Not 33 Table 4.6.11 Complication of Property Tax 34 Table 4.6.12 Reason of Complications in Paying Property Tax 34 Table 4.6.13 Existing Problem related to H and L Tax 35 7 LIST OF FIGURES Figure No. Title Page No. Figure 4.1 Property Tax and other Internal Sources/Income 21 Figure 4.2 Percentage House and Land Tax and Percentage other Internal Sources 21 Figure 4.3 Contribution of Houseand Land Tax to Total Revenue of Ghorahi Municipality 23 Figure 4.4 Budgeted and Actual House and Land Tax of Ghorahi Municipality 24 Figure 4.5 Trend Line of House and Land Tax of Ghorahi Municipality 25 8 ABBREVIATIONS AND ACRONYMS CEDA : Central for Economic Development and Administration DDC : District Development Committee ed : Edition FY : Fiscal Year GDP : Gross Domestic Product GON : Government of Nepal GM : Ghorahi Municipality H and L : House and Land i.e. : That is LSG : Local Self-Government MLD : Ministry of Local Development MOS : Ministry of Finance SLG : Self-Local Government Sq.ft : Square Feet T.U. : Tribhuvan University UNHCR : United Nations High Commissioner for Refugees VAT : Value Added Tax VDC : Village Development Committee : Summation % : Percent 9 CHAPTER – I INTRODUCTION 1.1 Background of the Study Property is a type of source. It is a financial source. Property is equally importance for people as income. Property is a kind of accumulated income. It can be save and store in the term of bank balance, land and building, stock, jewelry, investment, motor vehicles etc. The property can be divide in tangible and intangible assets, financial and physical, movable, and immovable. Property is a means of production and base for holding property. In other word, property can used for obtaining incomes. It is the index for calculating the taxpaying capacity of the persons, who hold property. Sometimes based on property ownership, the income tax also can be impose. In brief, the property can be define as a source for production, basis for obtaining income, it is a base for better lives that can be transfer to other and it can be divided in tangible and intangible. The tax imposed on this property has known as property tax. In Nepal, the first elected government introduction this tax. Property tax was been introduced by finance act 1959. It was been implemented under property tax act in 1960. Due to ineffectiveness in collecting revenue. It was replace by urban house and land tax later. Urban house and land tax was been introduced in 1962 for collecting Revenue from urban house and land property. Initially, Bhaktpur, Biratnagar, Birgunj, Nepalgunj, Rajbiraj,Janakpur and Butwalin 1963/64 and Bhairawa, Pokhara, Palpa and Hetauda in 1973/74. The tax was been introduced in Bharatpur in 1988/89. The interim government of 2047 again introduced the property tax in 1990 by the finance act in the beginning and by property tax act 1990. However, it was been again replaced by urban house and land tax in 1995/96. After the introduction of local self-government act in 1999, property tax in given to local bodies right now there are two variant of property taxes. House and land tax and unified integrated property tax. Local bodies are VDCs and Municipalities have the right to collects property tax where up the right of collecting unified property tax has given to Municipality. In simple word, a tax is a compulsory levy and those who are taxed have to pay it without corresponding benefit of service or goods from the government the tax payer does not have any 10 right to receive direct benefit from the tax paid.
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