Kathmandu, March 18 : Leading economists, activists, and policymakers convened today at Kathmandu, Nepal in the event titled “Tax Justice for Urgent Climate Actions and Equitable and Just Transition” to discuss Nepal’s growing inequality and the urgent need for progressive tax reforms on March 17, 2025.

Speakers emphasized that the country’s current tax system disproportionately burdens low-income groups while offering excessive benefits to the wealthy and large corporations, deepening economic disparities and limiting Nepal’s ability to fund essential public services and climate resilience efforts.

Nepal faces a dual challenge of tackling economic inequality and addressing the climate crisis. Experts highlighted that regressive taxation—where indirect taxes such as VAT and excise duties fall heavily on ordinary citizens—limits the state’s ability to invest in public goods, social protection, and climate adaptation measures. A more just tax system is essential to ensuring both economic and environmental sustainability.

Lidy Nacpil, a climate and tax justice activist, placed Nepal’s tax challenges within the broader global context: “Governments across the world are under immense pressure from corporate interests to maintain unjust tax structures. At the same time, countries like Nepal, which are already vulnerable to the climate crisis, lack the fiscal space to invest in climate resilience. Progressive taxation is not just an economic issue—it is a climate justice issue. Those most responsible for pollution and profit accumulation must contribute their fair share.”

Dr. Dilli Raj Khanal, a leading economist, explained the technical consequences of regressive taxation:
“Nepal’s current tax policies disproportionately burden lower-income groups while providing undue benefits to the wealthy. This not only widens inequality but also weakens the country’s fiscal capacity to invest in long-term development and climate mitigation strategies.”

Hon. Anjaan Shakya, Member of the National Assembly in Nepal, stressed the urgency for reform: “A progressive tax system is not just about fairness—it is a prerequisite for Nepal’s sustainable development. Without higher contributions from wealthier individuals and corporations, Nepal will continue to struggle with underfunded public services and rising social inequalities.”

The discussion concluded with a strong call for policymakers to reform Nepal’s tax system by reducing reliance on indirect taxes, enforcing tax obligations on high-income groups and corporations, and ensuring that tax revenues are directed toward social equity and climate adaptation. Experts warned that without urgent action, Nepal risks deepening economic divides and falling further behind in its climate commitments.