The Ministry of Finance (MoF) has clarified that imposing taxes solely on the basis of using roads for transporting goods is against the law.
According to the MoF, the Constitution, the Intergovernmental Fiscal Management Act, 2017, and the Local Government Operation Act, 2017 do not grant provincial or local governments the authority to levy taxes on the transport of locally produced goods between provinces or between local jurisdictions.
Some local governments have been charging taxes and fees on goods passing through their territories. The Ministry noted that such practices have negatively impacted farmers and traders. It clarified that local governments cannot impose taxes on goods coming from other districts or local levels simply because the road passes through their area.
In response to this issue, the MoF on December 9 decided to formally notify all provincial governments and local levels. MoF Spokesperson Tank Prasad Pandey confirmed that the necessary correspondence has already been issued according to the decision.
