Govt to unveil social security package

KATHMANDU, Nov 17: The government is soon introducing layoff benefits and special social security packages to the income earners who made social security tax contributions introduced in the last fiscal year.

The government had imposed one percent social security tax to all income earners through budgetary announcement, promising different social security schemes for them.

“Going by the commitment, we are announcing four major schemes -- lay off benefits, health insurance, accident cover and maternity benefits,” said a senior Finance Ministry official.

The benefits will be announced exclusively for the social security tax payers. And to start with, the incentives will be meager as well, the source told Republica.

Under the benefit, the government will provide basic salary to the wage earners and other taxpayers if they went out of work, securing them financially during the lean job period.

As this benefit will cushion service holders through their unemployment, the government believes implementation of this benefit will facilitate liquidation of companies, preventing undue resistance and demands from the workers.

“As employer, we are hopeful it will pave way for the introduction of ´hire and fire´ provision in the country´s existing rigid labor regime,” said Surendra Bir Malakar, president of Nepal Chamber of Commerce (NCC), who was a member of the team that worked out the schemes.

The health insurance package, meanwhile, will cover medical bills of social security taxpayers when they fall ill, while accident benefits will institutionalize the system of compensating employees in case of industrial accidents and workplace hazards.

“The ceiling of such benefits and extent of coverage will be announced after necessary consultation with technical experts,” the source said.

Likewise, if the social security tax contributor is female, she will enjoy maternity benefits, which will cover cost of delivery and also basic salary during the leave period.

“Most of the formal sector institutions already have their own maternity scheme in place. The state-run package will support those who are still out of such net,” said the source.

* Layoff benefits to cushion taxpayers
* Health and accident benefits to compensate medical bills
* Maternity benefits for female income earners
* Separate law to institutionalize all social security plans

For the purpose, the government is soon managing the social security tax under a separate heading and ceding the money thus collected in a separate social security fund. This will be addressed in the new Financial Regulations.

So far, the tax was being collected under the same heading of income tax. Because of this, even concerned revenue officials are unaware of actual collections of social security tax.

“As per our rough estimate, we managed to collect some Rs 400 million under the social security tax,” said Rajan Khanal, director general of Inland Revenue Department.

Apart from the employees, the government and the employers too have agreed at making equal contribution in the fund.

“The fund will be managed and handled by a new entity and governed by a separate regulations related to social security,” said the source, adding that it will help institutionalize the concept of national social security plan and widen the coverage further.

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