Government withdraws 3% equity tax on education and healthcare

The government has decided to suspend the implementation of the 3% equity tax on private education and healthcare services following widespread public criticism.

Prime Minister Balen Shah announced on social media that the decision was made after widespread public concern against the tax, he said, adding that the decision to withdraw was made in consultations with the Finance Minister Dr Swarnim Wagle. He said the tax, if implemented as planned, would have increased costs for the public and added to their financial burden.

The 3% equity levy was introduced through the fiscal year 2026/27 budget and was scheduled to take effect from July 17. In his statement, PM Shah said, “the objective behind the tax was to improve access to quality education and healthcare for people living in remote and underserved areas, support Dalit, marginalised, and economically disadvantaged children, expand health insurance coverage, and mobilize the financial resources needed to achieve these goals. It also aimed to broaden the tax base and make the economy more structured and efficient.”

However, the proposal faced strong opposition from private schools, colleges, hospitals, political parties, and the general public, who argued that the additional charge would ultimately be passed on to students, parents, and patients.

In his statement, Prime Minister Shah said the government remains committed to listening to public concerns and is prepared to revise policies that do not serve citizens' interests. He emphasised that public welfare and good governance remain the administration's top priorities.

Although the equity tax has been put on hold, the government reaffirmed its commitment to enforcing existing social responsibility measures. These include requiring private hospitals to reserve 10% of their beds and private colleges and universities to allocate 10% of their seats in a transparent and equitable manner for low-income and disadvantaged citizens.