Himalayan News Service

Kathmandu, January 16:

Business sector, including the tourism industry have flayed the hike in Value Added Tax (VAT) rate by three per cent at a time when the economy was facing survival threat due to low level of business confidence. Not only that, business activities has completely come to a halt due to insurgency, they complained, “Now the increment in VAT rate is going to push the prices of consumer products up unbearably.”

Binod Bahadur Shrestha, president of Federation of Nepalese Chambers of Commerce and Industry (FNCCI) said ‘at a time when the petroleum products’ prices have risen, to increase VAT rate by three per cent would push prices of consumers products high. He said that instead of supporting the business sector and increase their confidence, the government increased the VAT rate, which is directly hitting the consumers hard. The government has to revoke the decision of VAT rate hike immediately, Shrestha demanded.

Surendra Bir Malakar, second vice-president of Nepal Chamber of Commerce (NCC), said that the VAT rate hike is a great concern for all of us as all chambers across the country are compelled to protest the government’s decision. Everybody knows that the country is in severe economic crisis for which the government should have seriously studied the problems and help them boost confidence. “The government has to revoke the decision considering the country’s grave economic situation, he added.

Prakash Shrestha, chairman of Lumbini Bank Ltd and a tourism entrepreneur commented that the timing of VAT rate increment is not appropriate as it will put extra burden on consumers. He said that in tourism business, they do maintain person-to-person account, which will add more overhead expenses following the VAT rate hike. “Even today, we have not been able to sell our product, he said. The government’s move would discourage the businessmen.” Tourist are not coming in expected numbers and going out of Kathmandu has become difficult leading the business to nose-dive, Shrestha said.

Professor Bhuwan Bajracharya said that the VAT rate increment by three per cent would increase the prices of consumer items to some extent. However, he opined that since there was already a low tax rate in Nepal, it would have been increased earlier.