Call for a Consultant to conduct a study on “Own-Source Revenue”

USAID’s SAJHEDARI – Support to Federalism

Call for a Consultant to conduct a study on “Own-Source Revenue” 

Background

A key challenge for many newly federalized/decentralized systems across the world is providing an adequate and clear legal basis for the administration, collection and enforcement of own source revenues(OSR), including local taxes and non-tax fees and charges. Own-source revenues are an important element of the financial eco-system for sub-national governments (SNG), as this income:

• Reinforces SNG budget capacity thus providing more resources to finance local services
• Provides a means for identifying SNGs which may have more or less fiscal basis and thus implementing equalization systems for the objectively fiscally poor
• Determines potential debt-carrying capacity 

The basis and rules for allocation and distribution of Provincial and local own-source revenues have been set in the Constitution, the Local Government Operation and Management Act, the Intergovernmental Fiscal Arrangement Act (IFAA) and potentially in other legislation which may clarify specific issues related to certain taxes(for example, in the 2018 Finance Act). 

Certain taxes and non-tax fees and charges have been defined as exclusive to the Federal, Provincial or Local Level, while others have been defined as concurrent (see Tables 1a and 1b in the Annex). 

In additional to a clearly defined legal and regulatory basis, it is also necessary for SNGs to have adequate personnel, systems, reporting, documentation, and oversight to actually collect the own-source revenues for which they have policy and administrative responsibility. They also need to be record and transmit those revenues sources that are shared between the Palika and Provincial level.

Provincial and local governments have been given authority over the setting and collection of their defined local taxes and fees and are responsible for adopting local legislation to implement their own-source revenue mobilization powers. Further, in the case of shared taxes, the collecting entity is responsible for ensuring transfer of the appropriate share to other government levels (see table 2, below).

Objectives of the Study

Against this backdrop, Sajhedari- STF Project intends to carry out a study to understand the overall context for Own Source Revenues (OSR) of the project’s two partner Provinces (Province No.5 and Sudur Pashchim Province) and partner Palikas. The study aims to develop the basic underlying status of own-source revenue policy development, administration, collection and enforcement in order to define a program of support to project partner provincial and local governments in improving their OSR mobilization through the development and implementation of Revenue Improvement Action Plans (RIAPs).

The study should carry out the following analysis:

1. Strategic review of Provincial and Palika tax and fee ordinances/decrees:
   • How have rates been set;
   • Definition of tax/ fee notification rules / processes;
   • Clarity of rules for tax/fee estimation and exemptions;
   • Process of tax/fee declaration by payer;
   • payment process
   • Definition of reminder and enforcement processes
2. Review of provincial or local communication/information about tax/fee regulations, payments and enforcement processes to taxpayers.
3. Data analysis of tax/fee collections since 2018 (overall and by source of revenue).
4. Review of RIAP for those sample palikas that have prepared this action plan, including 
   • How palikas have been able or not to implement the steps proposed in the RIAP;  
   • An analysis of the realism/adequacy/ pertinence  of the RIAP
5. Review of data status of tax bases and the process for updating these tax bases for key property/land taxes.
6. Analysis of systems for tax and revenue collection (staff, organization, communication, documentation, reporting).

Based on the findings from these analyses, prepare recommendations for a targeted approach to support partner Palikas/ Provinces. The recommendations would help to inform support on the preparation of Revenue Improvement Action Plans (RIAP), with a focus on the top two or three revenue sources, and which could be considered as “low-hanging fruit”.

The analysis should also help identify any policy, legislative, administrative or procedural gaps that inhibit local revenue generation.

Deliverables

The researcher/ consultant is expected to provide the following reports and analysis, prepared in collaboration with the Urban Institute’s Senior Local Government & Municipal Finance Specialist:

Present a detailed plan and study framework (including proposal for selection of target Palikas – up to two or three in each Province, including a mix of Palikas with and without a RIAP) within two weeks of signing the agreement to be discussed with Sajhedari program team before the assignment begins.

• Prepare an interview protocol for field work with partner provinces and palikas
• Produce a draft report on items 1 and 2 of the study objectives.
• Produce a draft report on items 3, 4,5 and 6 of the study objectives.
• Produce a draft of recommendations to support partner Provinces / Palikas to improve OSR policy development, administration and collection that would define the approach to develop/amend the respective RIAPs.
• Produce a final report incorporating the comments and suggestions from Sajhedari program team and the Urban Institute, USA
• Present the key finding and takeaways of the study in a stakeholder meeting comprised of federal, provincial and local elected leaders and relevant GoN officials

The report should contain graphs, case studies and pictorial representation of situation to the extent possible and it should provide complete and authentic citations using Vancouver or Harvard Methods of Referencing.

Level of Effort and Timeline

The expected level of effort to conduct the study is expected to be between 30-40 days starting from October 2020 to January 2021. The level of effort (no. of days) will be negotiated after submission of inception report. 

The consultant is required to visit provincial headquarters and selected Palikas of SudurPashchim and Province-5, in accordance with ongoing CoVID-19 restrictions or requirements. The travel cost including for accommodation and food will be covered by the project as per the rules for travel and per diems.

Reporting and Coordination

The consultant will report to the Policy and Research Lead and will liaise with project team members and consult at all key steps with the sub-contractor/partner, Urban Institute,during the carrying out of the study. As required, weekly or bi-weekly update meetings will be held.

Required Qualification and Skills

• At least Master’s Degree in Economics, Public Finance, public policy or similar subject
• At least seven years of experience working in economic and/or governance sector in Nepal
• Sound understanding of federalism implementation in Nepal 
• Excellent inter-personal and communication skills 
• Demonstrated ability to conduct research and analyses
• Strong writing skills in English
• Demonstrated knowledge to be able to set high standards in ethical aspects of the study and field work
• A good understanding of Gender Equality & Social Inclusion issues and challenges in Nepal

Apply

Qualified candidates are requested to submit a cover letter along with updated CV to procurement@stfnepal.org with subject line “Study on Own-Source Revenues” by October 30, 2020. Please indicate your ability, availability and daily rate to undertake the terms of reference above.