Nepal
Policy Advocacy to Achieve Community Forestry Tax Reform in Nepal

Contract: August 2020 – January 2021

Funds: USD 49,010

Project Implementer: Federation of Community Forestry Users Nepal (FECOFUN)

Collaborators: Community Forestry User Groups (CFUGs) and Green Foundation Nepal

Beneficiaries: Community Forestry User Groups (CFUGs) and the Gaindakot municipality

Project Summary

The aim of this RRI-funded Strategic Response Mechanism (SRM) was to improve community forestry governance and safeguard community conservation and self-determined development through the resolution of multilayered taxes on community forestry by way of strong advocacy across three levels of government. The Nepali government’s triple taxation policy adversely affected the success and expansion of the community forestry sector throughout the country. RRI and FECOFUN joined forces to increase Community Forestry User Groups’ (CFUGs) awareness of this new policy by conducting workshops, leading multi-stakeholder forums, and crafting messaging tactics directed at policymakers.

Context

Since Nepal’s new constitution came into effect in 2015, administrations have sought new revenue streams, unfairly targeting Nepal’s community forestry industry. CFUGS must pay federal, provincial, and municipal taxes sometimes reaching or surpassing 70 percent of their annual earnings, a huge barrier to local time and resource commitments in the community forestry sector. The Federation of Community Forestry Users Nepal (FECOFUN) represents almost 22,000 CFUGs and has protested the taxation rate as a waste of funding that could be more efficiently used for forest conservation, education, livelihoods, paying microloans, and other initiatives as per Nepal’s Community Forestry Guidelines. If this issue persists, a huge quantity of resources available in community forests such as timber, herbal medicines, water, and other forest products could be destroyed in just a few years.

How did we help?

Acting as a second-tier government, FECOFUN advocates for CFUGs who otherwise have little opportunity of being heard in national governance meetings. Nation-wide policy commitments and new legislation have a tendency to either secure or undermine tenure arrangements so FECOFUN leveraged media exposure to increase public support for the communities through informal and formal pleas. They’ve done this by:

  • holding discussions;
  • engaging and motivating a wide range of partners and allies at the national and local levels;
  • using media to expose these challenges; and
  • participating in and pushing for new policy-making processes.

To address advocacy and media, a policy and position paper highlighting the consequences of the 3-tiered tax system was prepared by a consultant at Rights and Resources Initiative (RRI). FECOFUN prepared four case studies showcasing CFUG livelihoods and documented the importance of community forestry in videos. These were passed on to decision-makers in tandem with an SMS campaign,  radio and newspaper advertisements, and news articles to help spread information to CFUGs which they then used to strengthen their opposition to the new tax structure. This media campaign targeted CFUGs 22,000 members across the country.

The second activity included multi-stakeholder meetings and workshops. At the national level, the meetings included government policymakers, lawmakers, FECOFUN representatives , and members from civil society working in the forestry sector. At the provincial and local levels, meetings included FECOFUN representatives, CFUGs, and policymakers. These meetings rallied a total of four national-level meetings, one national-level workshop, 14 provincial-level mass meetings, and 15 local-level interaction meetings.

Outcome

As a result of RRI’s SRM and FECOFUN’s continuous advocacy, changes have occurred in Nepal’s tax policy. The 15% tax imposed by the Federal Government of Nepal over the Sal and Khair species has been removed. The government  is now promoting forestry-based activities and industry to create employment opportunities. While these changes are welcome,  concerns surrounding future multi-layered tax systems remain the same. Nepal’s locally-managed community forests have been praised internationally as a successful model for not only protecting biodiversity, but also supporting livelihoods, women’s empowerment, and poverty reduction. As a mass-based organization with many members currently holding government positions, FECOFUN is constantly working to ensure that Nepal’s globally-recognized community forestry sector can continue withstanding the volley of emergent complications like unfair policy legislation and taxation.