Himalayan News Service

Kathmandu, January 18:

Following deputy prime minister Bharat Mohan Adhikari’s statement refusing to revoke the decision of hike in VAT rates, finance secretary Bhanu Prasad Acharya today hinted at legal action against those who do not abide by the decision as per the current provision which has become operational starting January 14.

Acharya reiterated that there would be no revision in the hike in VAT rates. The remarks from senior government officials and the minister came following the decision of the private sector not to pay the increased VAT rate. Private sector organisations namely Federation of Nepalese Chambers of Commerce and Industry (FNCCI), Nepal Chamber of Commerce (NCC), Confederation of Nepalese Industries (CNI) and other chambers have opposed the government move on VAT rate. Acharya admitted that the country is at a serious financial position and there is no option but to increase the VAT rate to recoup and maintain expenditure. “The decision has been taken keeping in view the long-term fiscal balance. The rate is lower compared to some of our neighbouring countries,” he said.

Senior economic advisor at the ministry of finance, Dr Govinda Bahadur Thapa commented that the increased rate of VAT would not affect the prices since there is no VAT on 55 per cent of consumable goods. However, the government has not yet ‘identified and informed’ consumers which goods are taxable. Referring to the need of an additional three billion rupees for the government, Dr Thapa said that the increment in VAT rate has come along with rise in civil servant’s pay and compensation for the conflict-hit people.

Dr Ram Sharan Mahat, former finance minister and Nepali Congress leader, charged that the government’s move is ‘anarchic and totally against the democratic fundamentals’ of no taxation without representation”.

“The parliament is a must for a major change in taxation or fiscal policy. But the VAT rate has been hiked ignoring people’s aspirations at this difficult time,” he said. Dr Mahat also lambasted the government’s failure to uphold its own promises of being pro-poor and providing support to poor people. “The decision came ignoring the ample other chances to raise additional funds through effective control of revenue leakage and strengthening custom collections,” he added.

Rajendra Kumar Khetan, vice-president, CNI said that the government’s decision to hike VAT rate has come without consulting the private sector. “The decision has been taken without a proper study of the consequences. This will encourage illegal imports and trading of contraband and the government will be ultimate loser,” he said. “We have already informed the government that we will not issue new VAT bills unless and until the government revisits its decision,” said Surendra Bir Malakar, vice-president of NCC.

Prem Lal Maharjan, general secretary of Nepal Consumers’ Forum, also criticised the government for raising VAT rate without consulting concerned stakeholders. “The government is making commoners scapegoats for the sake of meeting increased security expenses,” he said.

NCC submits MoU

KATHMANDU:

NCC today submitted memorandum to Prime Minister Sher Bahadur Deuba and Deputy Prime Minister and Finance Minister Bharat Mohan Adhikari, separately, asking to review the recent VAT rate hike. “If the government fails to address the issue, the private sector will launch decisive protests nationwide,” states a press release. — HNS