Prime Minister Balendra Shah announced on social media on Tuesday that the proposed three percent equity fees on private education and health services would not be implemented, saying the levy would have increased the financial burden on the public.

Following the announcement, Kantipur’s Yagya Banjade spoke with Finance Minister Swarnim Wagle about how the decision was reached and how it will be given legal effect. Edited excerpts:

The prime minister has announced that the proposed equity fees on education and health will be withdrawn. Was this a Cabinet decision?

The proposal to suspend the fees has been prepared for the Cabinet. The provision was introduced under Section 18 of the Financial Act. I held a one-hour discussion with the prime minister on Monday, and today’s announcement was made based on that consultation. We had also discussed the matter together when the fees were first proposed. The decision now is to suspend their implementation.

The fees were part of the broader concept of an Equity Fund, which was intended to finance nutrition programmes for Dalit and marginalised children, expand health insurance coverage and improve public educational institutions.

We had identified a few revenue sources for the fund, including the education equity fee, health equity fee, excise duties on alcohol and tobacco products, and certain charges on foreign currency used by Nepalis travelling abroad. The decision now is to suspend the education and health equity fees for the time being.

If the education and health fees have been suspended, what happens to the proposed Equity Fund?

We are drafting an executive order to establish the Equity Fund, similar to the Reconstruction Fund. Although revenue from these two fees will no longer be part of it, we are discussing alternative sources of funding.

The proposal was prepared on Monday.

Was it discussed at Monday’s Cabinet meeting?

Yes, it was discussed. In a parliamentary system with a strong prime minister, what the prime minister says is final. We consulted each other when introducing the fees, and the decision to suspend them was also made through mutual consultation.

Does this mean the government underestimated the public impact when it introduced the proposal?

I would rather not comment on that at this stage.

Will the Cabinet formally endorse the decision?

Yes. The necessary policy decision will be taken.