Role of Tax Revenue, Non-tax Revenue, and Foreign Aid to Increase the Size of Budget in Nepal

Abstract

Purpose: The purpose of the present study is to find the impact of tax revenue, non-tax revenue, and foreign aid to increase the size of the budget in Nepal.
 Methods: This study is based on descriptive, analytical, and exploratory research designs. The Johnsen Co-integration Test, VECM, Wald Test, and Granger Causality Test are used to find long-run relation, impact, short-run causality, and granger cause between the pairs of variables.
 Results: The tax revenue, non-tax revenue, foreign aid, and budget are co-integrated, or they have a long-run association ship. The result of VECM shows that tax revenue, non-tax revenue, foreign aid is nicely fitted, and they are jointly significant to explain the size of the budget in Nepal. Short-run causality was found between the size of budget and tax revenue and size of budget and foreign aid, but there was an absence of short-run causality between budget and non-tax revenue in Nepal. The granger cause was not found between the pair of variables.
 Implications: It seems to increase the tax revenue and decrease the dependency on foreign aid.
 Limitations: This study was based on the secondary data of 40 years from the fiscal year 1979/80 to 2018/19. Only three variables, tax revenue, non-tax revenue, and foreign aid, are considered the effecting factor of the budget size. Hence, further study is necessary by employing other tools and variables.
 Originality: The author was not affected by the study and findings of others.

Forecasting and Measuring The Impact on Non-Tax Revenue of Its Principal Determinants in Nepal

“…Fees, fines or penalties, betterment levy or special assessment, grants and gifts, deficit financing, license fees, natural resources. The profit of public enterprises and escheats are excellent sources of revenue other than tax (Dahal, Dhakal, et al, 2020). Tax revenue is the most significant source of revenue for the government.…”