KATHMANDU: The government has withdrawn its proposed 3% Education TAX and Health TAX on private education and healthcare services, citing concerns that the new levy would increase costs for the public.

Prime Minister Balendra Shah announced that the decision, reversing a provision introduced through the Economic Bill.

“The government has concluded that implementing the 3% equity levy at this stage would impose additional financial burdens on ordinary citizens and create public dissatisfaction. Therefore, after discussions with the Finance Minister, it has been decided not to implement the Education Equity TAX and Health TAX for now,” Shah said in a statement.

The Prime Minister said the proposed levy had been designed to raise funds to improve access to quality education and healthcare in remote and underserved areas, support Dalit, marginalized and low-income children, expand health insurance coverage, and broaden the country’s tax base.

However, Shah acknowledged that strong public opposition prompted the government to reconsider the measure. He said the administration remains committed to listening to citizens and is prepared to revise policies whenever necessary to protect the public interest.

Despite withdrawing the proposed fees, the government said it will continue pursuing measures to improve access to education and healthcare for disadvantaged groups. As part of that effort, it plans to enforce a policy requiring private hospitals to reserve 10% of their beds and private colleges and universities to allocate 10% of their seats for eligible low-income beneficiaries through a transparent and equitable mechanism.